> For the complete documentation index, see [llms.txt](https://ark-defai.gitbook.io/ark/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ark-defai.gitbook.io/ark/4.-layer-1-or-economic-laws-of-ark-defai/4.2-five-regulation-modules/4.2.1-em-module-or-emissions-manager-intelligent-debt-issuance-module/ii.-two-core-concepts.md).

# II. Two Core Concepts

#### 1. Backing Price

**Definition:**

```
BackingPrice = Total Treasury Value / Total ARK Supply
```

* **Total Treasury Value**: Total value of protocol treasury (USDT, ETH, LP, bond assets, etc.)
* **Total ARK Supply**: Total ARK issuance (including circulating and locked)

**Significance of Backing Price:**

* It represents the protocol's internal value support estimate for each ARK
* It serves as the core benchmark for all token issuance and price stabilization modules
* If market price falls below backing price, it indicates a breakdown in market trust of the protocol's value

#### 2. Premium Index

**Definition:**

```
Premium = Market Price / Backing Price
```

* Premium is the ratio of market price to protocol backing price and serves as the basis for determining whether EM is activated.
* The protocol allows token issuance only when Premium ≥ Min Premium (minimum premium threshold). This setting prevents excessive debt issuance when the market lacks confidence.