2025-01-08 12:24:28The Loan-to-Value (LTV) ratio is a key metric in managing your Fixed Rate Loan on Bybit. It represents the relationship between the loan asset value and the value of your collateral, expressed as a percentage. Understanding and monitoring your LTV ratio is essential for managing risk and avoiding potential liquidation.
What Is the LTV Ratio?
LTV is calculated using the following formula:
LTV = (Loan Value / Collateral Value) x 100%
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Loan Value = SUM (Outstanding Loan Principal + Overdue interest) x Spot Last Traded Price
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Collateral Value = SUM (Collateral Assets x Spot Last Traded Price x Collateral Value Ratio)
Example
Assume:
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Loan Principal: 60,000 USDT
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Collateral: 25 ETH
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ETH Price: 3,000 USDT
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Collateral Value Ratio (for illustrative purposes)
|
Coin |
Tiers (USDT) |
Collateral Value Ratio |
|
ETH |
0-50,000 |
100.0000% |
|
50,000-100,000 |
97.5000% |
The LTV is calculated as follows:
Loan Value = 60,000 USDT
Collateral Assets = (25 x 3,000) = 75,000 USDT
Collateral Value = (50,000 x 1) + (25,000 x 0.975) = 74,375 USDT
LTV = 60,000 / 74,375 x 100% = 80.67%
Note: The LTV operates in Cross Margin Mode, allowing all loan orders to share the same collateral value across your collateral assets. This provides greater flexibility in managing your collateral.
Key LTV Thresholds
|
Key LTV Thresholds |
LTV Value |
Description |
|
Initial LTV |
80% |
This is the ratio of the borrowed amount (plus interest) to the total value of your collateral at the time of borrowing. The initial LTV for the fixed-rate loan is 80%. This means you can borrow up to 80% of your collateral's value. |
|
Margin Call LTV |
85% |
The LTV level at which a margin call is triggered, prompts you to manage risk by adding more collateral. |
|
Liquidation LTV |
92% |
The threshold where liquidation occurs and your collateral is used to repay the loan. A 2% force repayment fee will be charged. |
How Do Margin Calls and Liquidation Work?
1. Margin Call:
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When your LTV reaches 85%, you will receive notifications via email or in-app notification. You can add more collateral or repay the loan to reduce the LTV.
2. Order Cancellation
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When your LTV surpasses 92%, any unmatched loan orders will be canceled first.
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If the LTV falls below 92% after cancellation, liquidation will stop. Otherwise, liquidation continues.
3. Liquidation:
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Bybit will trigger a liquidation of your collateral to force repay the loan. Your collateral will be liquidated to cover the loan amount.
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A 2% force repayment fee will apply and be deducted from your collateral.
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Any remaining collateral after liquidation will be returned to your Funding Account.
Reduce Liquidation Risk
While liquidation cannot be entirely avoided, you can take the following steps to minimize the risk:
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Monitor Your LTV Ratio Regularly: Maintain sufficient collateral at all times to keep your LTV ratio within a safe range. For detailed guidance, refer to the Bybit Fixed Rate Loan Guide.
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Enable Auto Repayment: Activate auto repayment to avoid overdue interest charges, which can negatively impact your LTV and result in a 3x penalty fee. Ensure your Funding Account has sufficient loan assets when auto repayment is active. If the account lacks sufficient funds, overdue status will be triggered, leading to forced repayment.
Please refer to this page for details on supported coins, minimum/maximum borrowing amounts, and conversion rates for each coin used as collateral.
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