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4 changes: 2 additions & 2 deletions docs/fassets/5-core-vault.mdx
Original file line number Diff line number Diff line change
Expand Up @@ -26,13 +26,13 @@ It addresses a critical challenge in cross-chain systems: **protecting user fund

### Why the Core Vault?

- In **FAssets v1**, every agent had to keep the underlying asset (e.g., XRP) in their own wallet.
- In **FAssets v1**, participating agents were required to individually hold sufficient redemption assets (e.g., XRP) in their wallets.
- To prevent theft, agents needed to be heavily overcollateralized - they had to lock up more value than they could ever profit from stealing.
- This worked, but it limited minting capacity and made the system capital-inefficient.

The **Core Vault** changes this model:

- Instead of holding XRP in their own wallets, **agents can transfer underlying assets into a shared, insured vault**.
- Instead of personally holding redemption assets (e.g., XRP), participating agents can now utilize a shared, insured, non-custodial vault.
- The vault is **multisig-controlled** and governed by Flare, so agents cannot unilaterally take the funds.
- Because theft is structurally prevented, agents no longer need extreme levels of overcollateralization.

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