A ratio between the amount of your loan and the market value of your collateral is a Loan-to-Value ratio (LTV).
LTV = (Loan Amount) / (Collateral Value)
On Squilla.Loans, borrowers and lenders can set up loan's LTV to up to 65%. This ratio keeps your collateral safe in the case of the market fall.
Higher LTV means that you will have to act fast in case of an extraordinary market situation.
In the positive scenario, the market value goes up, and the LTV ratio goes down. Hence, you can unfreeze some part of your collateral.
In the negative scenario, your collateral value drops significantly, thereby increasing your LTV.
As soon as your LTV reaches a danger zone of 75%, we mark your loan with a “liquidation risk” label. You will get an email notification about a new status of your loan, in that case, you need to increase your collateral value by replenishing more cryptocurrency to stabilize the LTV on the 65% mark.
Otherwise, upon reaching 85% LTV your collateral will be liquidated and 5% commission will be charged.