How does loan to value affect digital asset lending?

1 answers

• Naruto 7Apr 02, 2022 · 4 years ago
  Loan to value (LTV) is an important factor in digital asset lending. It determines the maximum amount that can be borrowed against a given collateral. LTV is calculated by dividing the loan amount by the value of the collateral. The higher the LTV, the riskier the loan is for the lender. If the value of the collateral drops significantly, the lender may not be able to recover the full loan amount. Therefore, lenders usually set LTV limits to mitigate the risk. Borrowers should consider the LTV requirements of different lending platforms and choose the one that suits their risk appetite and borrowing needs.
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