A loan’s LTV (loan -to-value) ratio determines the amount of Bitcoin collateral you need to pledge in order to take out a loan. For example, a USD 1m loan at a 50% LTV would require the borrower to pledge USD 2m in Bitcoin to receive USD 1m in capital.
With the given LTV, the lender is able to manage the risk of price fluctuations with the collateral. The LTV can be negotiated between the borrower and the lender.
Calculate how many Bitcoins you need to pledge to receive the loan amount you require.
Collateral amount based on a 50% Loan to Value (LTV). Learn more about LTV ratios. The term length can be determined by the borrower.
While the Lender stores the collateral, the value of the Bitcoin may increase or decrease. With this Bitcoin loan structure any gains from price appreciation are the clients to keep once the loan is paid off. This allows the borrower to keep their Bitcoin and gain from the appreciation instead of liquidating their position.
Within the terms of the Master Loan Agreement the Lender will include a margin call if the price of the Bitcoin decreases to a certain amount. Usually down 15-20% may trigger a default. In this case the borrower would be required to top up the LTV with either additional Bitcoin or cash to cure the default.