> For the complete documentation index, see [llms.txt](https://barrif-on-berachain.gitbook.io/barrif-on-berachain/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://barrif-on-berachain.gitbook.io/barrif-on-berachain/introduction/publish-your-docs.md).
# Core Mechanics
The **Bariff** ecosystem is built around several components that make memeFi happen in a safe, elegant, and dynamic way. At its core, the protocol features two mutually correlated tokens, **CHINA** and **USA**, each with the following characteristics:
## **1. Tuple Token Design: CHINA vs. USA**
* **CHINA**: Communist-oriented, BERA-backed metastable memecoin, **minted with BERA as collateral**.
* **USA**: capitalism-oriented, BERA-backed metastable memecoin, **minted with BERA as collateral**.
* **Both tokens exist in a K-equilibrium**, where their combined value follows:
* As **CHINA demand increases**, **USA**’s price adjusts to maintain balance.
* As **USA demand increases**, **CHINA**’s price dynamically compensates.
## **2. Dynamic Minting & Perpetual Leverage**
**2.1 Minting as a Long/Short Mechanism**
* Users **deposit BERA** to mint either **CHINA or USA**, effectively **longing one asset while shorting the other one,** without a fixed period of time.
* Burning **CHINA** allows minting **USA** (and vice versa), enabling **strategic arbitrage**.
* Minting fees dynamically adjust based on price disparities, ensuring metastability.
**2.2 Price-Based Dynamic Minting Fee**
The key for protocol sustainability is implementing **dynamic collateral** in response to excessive price divergence. In that sense, we can introduce a new concept called **dynamic LTV mechanism**, that adjusts based on the relative price difference between Token A (CHINA) and Token B (USA).
The standard **Loan-to-Value** is 80% when the price of A and B are close. As the price divergence increases, the LTV decreases, forcing borrowers to adjust their collateral. This prevents over-leverage in unstable conditions and reduces the systematic risk.
**2.3 Defining Dynamic LTV Function**
Let,
* $$P\_A$$ and $$P\_B$$ be the prices of tokens A and B.
* $$\Delta P = |P\_A-P\_B|$$ be the absolute price difference.
* $$LTV\_b=80%$$ be teh default LTV when $$P\_A=P\_B$$.
* $$LTV\_m$$ be the minimum LTV allowed.
* $$k$$ be a **sensitive factor** controlling how fast LTV drops.
* $$D\_M$$ the divergence threshold, which defines when the LTV reaches its minimum.
A simple way to adjust LTV is:
$$
LTV = \max\left(LTV\_m, LTV\_b - k \cdot \left(\frac{\Delta P}{\min(P\_A, P\_B)}\right)\right)
$$
Where:
* If $$\Delta P$$ is **small**, LTV remains at 80%.
* If $$\Delta P$$ exceeds a predefined threshold, LTV approaches 60%.
* **k** determines how aggresively LTV is reduced as price difference grows.
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