# Collateralization The collateralization model is unique to veVELO mechanics. It ensures that no opxVELO can *ultimately* come into existence without being over-collateralized, but also involves strategies that include *locking* value. This under-collateralizes the circulating supply until returns - which are structured to outperform the target APR due to these mechanics - replenish the liquid backstop. A majority of VELO is vote-escrowed and thus illiquid, meaning it cannot preserve the peg. This however will be used to accumulate a basket of assets for the liquid backstop. veVELO veNFTs receive rebases, increasing the VELO to opxVELO collateralization rate; only note that this VELO is returned to veNFT, max-locked, and thus cannot be counted as part of the backstop. VELO collected from trading fees is added to the liquid backstop or veVELO position as needed. **There is no max supply of opxVELO, but minting can be paused if necessary.** No opxVELO enters circulation without 1 VELO being permanently bonded to our project. opxVELO is removed from circulation when diluted (under peg) for the cost of < 1 VELO using the liquid backstop. This allows the **tokenized** value of the OpenX's Project veVELO position to be and remain liquid.