Loan-to-Value (LTV) Ratio

The core formula used in the protocol is the Loan-to-Value (LTV) ratio. The LTV ratio determines how much a borrower can borrow against their collateral. In this protocol, the LTV is capped at 80%.

LTV Formula:

LTV = Loan Amount / (Total Collateral Value * 80)

• Loan Amount is the amount borrowed.

• Total Collateral Value is the sum of the values of the assets deposited as collateral.

For example, if a borrower deposits $10,000 worth of ETH, they can borrow up to 80% of their borrowing asset i.e $8,000 USDT.

• Maintaining a Healthy LTV: Keeping your LTV within safe limits helps protect against liquidation and ensures you can repay your loan without losing collateral.