The proportion of the collateral asset's value compared to the value of the issued loan.
The proportion of the collateral asset's value compared to the value of the issued loan. Lygos Finance mandates a safe collateral ratio to support its 10% APR lending model, protecting institutional capital while leaving enough breathing room to prevent sudden margin calls for the borrower.
The collateral ratio is a key health metric for any secured loan. If a borrower provides $200,000 in Bitcoin for a $100,000 loan, the collateral ratio is 200%. High volatility in crypto markets necessitates higher collateral ratios to ensure the lender is always protected against sudden price crashes before liquidation can occur.
Lygos Finance mandates a safe collateral ratio to support its 10% APR lending model, protecting institutional capital while leaving enough breathing room to prevent sudden margin calls for the borrower.
Understanding Collateral Ratio is critical when comparing loan offers. This concept directly affects how much you pay, how much collateral you need, or what happens if market conditions change during your loan.
Starting at 10% APR, $0 origination fees, and DLC-secured collateral on the Bitcoin blockchain.