# How USDO Increases in Value

When collateral increases, many stablecoins increase the supply of the stablecoin to maintain the peg or let it be overcollateralized. And when collateral decreases, many stablecoins have to lower the supply again to maintain the peg.

**The value of USDO is calculated by taking the total collateral and dividing it by the total circulating supply.**

All transactions on MiaSwap that generates AMM fees will have 20% of their amount converted to a pre-approved stablecoin and deposited into the USDO collateral. This means that USDO will now be overcollateralized. So, instead of letting it sit there like that, we will rebase the value of USDO at the new rate.

**Let’s use a simple illustration with a low value:**

<figure><img src="https://lh5.googleusercontent.com/o2V5o4uEZXmoC-Q72O1shusrENt4q3WKoEwTVp631KZqBmD1WYTrRBI5m_XQEQt7QzRlLCRXS2stx4jo8v0uLZADbW4f03EACmhZ1bf-sNQmthFoQPsPZ-_qigOFzXyWIbaJjmkKF3K53bW6fI4nkdRE1e3pHqEauovYflWTUTFPIfhnK7EAwcRo" alt=""><figcaption></figcaption></figure>

* Collateral = 1 BUSD
* USDO circulating supply = 1
* The current rate is 1 BUSD per 1 USDO
* Mint: 1 BUSD for 1 USDO
* Redeem: 1 USDO for 1 BUSD

**Now, we add in some fees from our AMM transactions. For example, 2 BUSD worth of fees.**

<figure><img src="https://lh3.googleusercontent.com/0BpWt0qwTFNQGZu6d2HfiushLKjby1YO16Og6kPFxFxZ43IqATKco_qBFXZw-HxchRcWS55DTRD95hj6K_32VGwoqgImVQorOCZBUe8WGnMiFbuax7R3nYGHs_bObnwg1Z7GVzrR6_g1Dh7EoS9RmCf9ZtpQpfa6XpmhFhBZPyrfiXd1Fk8Ela8c" alt=""><figcaption></figcaption></figure>

* Collateral = 3 BUSD
* USDO circulating supply = 1
* The current rate is 3 BUSD per 1 USDO
* Mint: 3 BUSD for 1 USDO
* Redeem: 3 USDO for 1 BUSD

In this sense, USDO is a little better compared to other stablecoins.

* Similar to countries appreciating their currencies when their economy is doing better, the better the ecosystem does, the more USDO can appreciate in value.
* The growth in value is collateralized by audited USD-backed stablecoins and not backed by traditional crypto coins.


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