What is the definition of LTV (Loan-to-Value) in the context of digital currency finance?

1 answers

• Nov 25, 2021 · 3 years ago
  LTV, or Loan-to-Value, is a key concept in digital currency finance. It refers to the ratio between the loan amount and the value of the collateral. Let's say you want to borrow $10,000 and you provide $20,000 worth of Bitcoin as collateral. The LTV ratio would be 50%. LTV is important because it helps lenders assess the risk of a loan. Higher LTV ratios indicate higher risk, as the borrower has less equity in the collateral. Lenders often set maximum LTV limits to protect themselves from potential losses. It's worth noting that different platforms and exchanges may have different LTV requirements, so it's important to understand the specific rules and regulations of the platform you're using.
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