Once the protocol has reached a certain scale and stability, where it is possible to forecast the number of stablecoins in circulation, it is possible for the protocol to transit into a fractional reserve model. This means that the reserve assets held in the treasury have a lower value than the aggregate value of all the stablecoins in circulation. Moving into a fractional reserve model means that the protocol becomes more capital efficient (ie 1 USD of assets can be used to back >1 USD of stablecoins), but also increase the risk of the protocol to remain solvent and retain the peg of the issued stablecoins.