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How does loan to value percentage affect the risk level of cryptocurrency borrowing?

avatarBoje BrantleyDec 26, 2021 · 3 years ago1 answers

Can you explain how the loan to value percentage impacts the level of risk when borrowing cryptocurrency?

How does loan to value percentage affect the risk level of cryptocurrency borrowing?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    At BYDFi, we understand the importance of the loan to value (LTV) percentage in cryptocurrency borrowing. The LTV ratio directly impacts the risk level for both borrowers and lenders. A higher LTV percentage increases the risk of default and loss for borrowers, as they have less equity in the collateral. It also increases the risk for lenders, as they have a higher chance of not recovering the full loan amount in case of default. Therefore, it's crucial for borrowers to maintain a suitable LTV ratio to mitigate the risk and ensure the safety of their investments. Our platform provides flexible LTV options, allowing borrowers to choose the level that best suits their risk appetite and financial situation.