Safety Indicators
Last updated
Last updated
Each loan is guaranteed by a collateral asset that may be subject to volatility. The risk parameters allow you to keep track on how these market conditions affect your debt position. If the value of the collateral falls below a certain threshold, your postion is subject to liquidation where anyone could initiate a transaction with which your collateral gets sold.
This percentage represents the maximum amount you can borrow against your collateral before reaching the liquidation threshold.
If the price of the supplied or borrowed assets changes, your ‘borrow limit used’ percentage will also change. It’s suggested that 80% is a safe maximum limit for borrowing. This is because once you reach 100% of your borrow limit, you are at risk of your assets being liquidated, or sold off, to service your loan.
The Loan to Value (LTV) ratio is defined by dividing the value of your outstanding debt over the value of your collateral. It’s expressed in percentage and at LTV=75% is the maximum amount of currency that can be borrowed with collateral. That means that for every 1 ETH worth of collateral, borrowers will be able to borrow 0.75 ETH worth of the corresponding asset. Once a loan is taken, the LTV evolves with market conditions.
The liquidation threshold is the specific LTV value at which a loan can be liquidated. For example, a Liquidation threshold of 75% means that if the LTV of a user rises above 75% of the collateral, the loan could be liquidated.
The delta between the Loan-To-Value and the Liquidation Threshold is the safety cushion for borrowers.
It is the live price of Ethereum in USD.
This represents the price of Ethereum in USD at which your loan will be liquidated.
