Crypto Loans: Collateral, Loan-to-Value and Liquidation Risks
Summary
The article explains a collateralized crypto loan and describes Bitget’s fixed-term product as presented in the document. A borrower stakes crypto collateral, receives a loan in fiat or another cryptocurrency, monitors the loan-to-value ratio, makes any permitted collateral adjustments, pays interest and repays to release the collateral. The article says the loan’s interest rate is fixed for the term but accrued hourly, repayment must use the borrowed cryptocurrency, and partial or early repayment is allowed. It also outlines initial, margin-call and liquidation LTV thresholds as risk controls.
If collateral value falls enough to reach the liquidation threshold, the collateral may be sold toward repayment; overdue loans accrue penalty interest, and a collateral shortfall may be covered by the product’s insurance fund. These mechanics make collateral volatility and LTV monitoring central risks for borrowers. The document is a provider-specific product guide, not a comparative analysis, and it warns that rates and terms can change. Its description should not be assumed to represent current loan conditions.
Key ideas
- A crypto loan lets a borrower obtain funds by pledging cryptocurrency as collateral.
- Loan-to-value thresholds govern margin calls and liquidation as collateral value changes.
- The described product accrues fixed-term interest hourly and requires repayment in the originally borrowed asset.
- Partial repayment and collateral adjustments can change outstanding debt and LTV.
- Liquidation can sell collateral, while overdue repayment adds interest and a shortfall may remain a risk.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.