# Favor Tokens Favor is **BetterBank’s synthetic credit token**, designed to **replace the void** of assets in **traditional fractional reserve banking** with a **fully on-chain, decentralized credit system**. Unlike conventional fiat-backed systems that rely on **trust in centralized institutions**, Favor’s value is **algorithmically regulated and dynamically adjusted** based on real market conditions. **How Favor Works** * **Acts as synthetic collateral** for **borrowing** assets in the [Wildlands](/better-bank/protocol-mechanics/the-wildlands.md). * For purposes of calculating Favor as a collateral asset, Favor types are limited to 3.5x their paired asset, even though there is no actual price ceiling. This limit helps safeguard the lending markets against price volatility and potential exploits. * **Liquidity-Backed Stability** – Favor tokens are **paired with their respective assets** (e.g. PDAIF to pDAI, and PLSF to PLS) to maintain deep liquidity and price alignment. * **Dynamic Seigniorage Model** – The supply of Favor **expands rapidly or slowly based on demand**, preventing instability and runaway inflation. * Favor tokens are soft pegged to their respective asset and do not stop emissions based on being under peg like earlier seigniorage models did. Rather, emissions just slow or increase printing based on the Favor price relative to the paired asset. **Favor’s Role in the BetterBank Ecosystem** * **The backbone of Wildlands lending**, acting as credit in the form of collateralized LP positions. * **Self-sustaining and demand-driven**, preventing **the failures of past algorithmic seigniorage tokens**. * **Supports deep, liquid DeFi markets** while ensuring long-term capital efficiency. Favor isn’t just another synthetic token—it’s **the key to unlocking capital efficiency and credit expansion in DeFi**. 🚀 --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://betterbanks-organization.gitbook.io/better-bank/tokens-of-betterbank/favor-tokens.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.