Loan-to-Value (LTV) ratio is a key indicator for evaluating the risk level of your borrowed assets:
UPay assesses risk by using the following three LTV ratios:
Initial Margin Ratio: The initial margin ratio determines the amount of the first loan you can borrow. It's important to note that different collateral types may have different initial margin ratios, which means the amount of borrowable tokens may vary accordingly.
Margin Call Ratio: When the margin ratio exceeds the warning level, you will receive notifications via email and on-site messages, reminding you to deposit more collateral into your wallet account or to repay the borrowed tokens to reduce your margin ratio.
*Please note: We strongly advise users to actively manage and monitor their accounts continuously to avoid risks associated with delayed or malfunctioning alerts. UPay assumes no responsibility for any forced liquidations that occur directly or indirectly due to failures of this alert function.
Liquidation Ratio: When the margin ratio exceeds the liquidation threshold, UPay will forcibly liquidate the collateral assets to repay the loan and interest. Please be aware that forced liquidation will be triggered when the respective liquidation ratio is reached.
Formula
LTV = Loan Amount/ Collateral Amount
Loan Amount = ∑ (Outstanding Principal + Outstanding Interest + Outstanding Overdue Interest)
You can view the LTV ratios, Interest Rate and Liquidation Price on the right side of the Borrow page.
Liquidation Price
The liquidation price is the price level at which liquidation is determined. When the Last Traded Price and Index Price reach the liquidation price, UPay will liquidate your collateral assets to repay your loan and interest in full. Please note that liquidation will be triggered when the corresponding Liquidation LTV ratio is reached.
Liquidation Fee: In the event of a liquidation, your collateral assets will be used to auto-repay your loan and interest in full and a 10% liquidation fee will be charged.The liquidation fee will be deducted from your collateral amount and any remaining collateral after full repayment will be credited back to the account.
Example:
Suppose the parameters of a Crypto Loans order initiated by Trader A are as follows:
Collateral Asset: BTC
Borrowable Asset: USDT
Outstanding Principal: 1,000 USDT
Outstanding Interest: 10 USDT
Outstanding Overdue Interest: 0 USDT
Collateral Quantity: 2 BTC
Liquidation LTV: 85%
Formula
Liquidation Price = (Outstanding Principal + Outstanding Interest + Outstanding Overdue Interest) / (Collateral Quantity × Liquidation LTV)
In this case, the liquidation price is 594.117647 USDT, based on the following calculation:
(1,000 + 10) / (2 × 0.85)
How to Adjust the LTV Ratio
Step 1: Click on My Borrowing order to enter the order page, and tap on Adjust Collateral Amount.
Step 2: Enter the amount of collateral you wish to add or reduce, or click "Max". Confirm all information is correct, then click "Confirm".
By increasing the amount of collateral, you can lower the Loan-to-Value (LTV) ratio, thereby reducing the risk of liquidation.
To reduce the amount of collateral, you can only do so when the current LTV ratio is below the initial LTV. The maximum reduction in collateral is the amount needed to restore the LTV ratio to its initial level.
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