What is Loan-to-Value (LTV)?

Loan-to-Value (LTV) is the ratio between the amount you borrow and the market value of the cryptocurrency you provide as collateral. It helps determine your borrowing capacity and your loan’s risk level.

LTV Formula:

LTV (%) = (Loan Amount / Value of Crypto Collateral) × 100

Example 1:

• Loan Amount: $50,000 USD

• Crypto Collateral Value: $100,000 USD

• LTV: (50,000 / 100,000) × 100 = 50%

What Happens If Your Collateral Value Changes?

• If Collateral Drops:
  If your collateral value falls to $60,000, your LTV becomes:
  (50,000 / 60,000) × 100 = 83.3%
  This puts your loan closer to margin call or liquidation thresholds.

• If Collateral Increases:
  If your collateral value rises to $150,000, your LTV becomes:
  (50,000 / 150,000) × 100 = 33.3%
  This lowers your risk and may allow you to withdraw excess collateral.