A loan’s LTV (loan-to-value) ratio determines the amount of crypto collateral you need to post in order to take out a loan. This number only applies when you’re getting a collateralized loan. These types of loans require clients to give the lender an asset, in our case digital currency, to hold until their loan is paid off. Click here for more information about our collateralized loans.
BlockFi Crypto LTV Ratio
BlockFi’s collateralized loans involve clients staking their crypto assets as collateral in order to borrow USD. We currently support collateral posted in Bitcoin, Ether, or Litecoin. BlockFi offers LTVs up to 50%. That number is based on a proven model to limit our exposure to risk and our client’s likelihood of hitting a trigger event.
Margin calls happen when the value of your collateral decreases outside of a safe range. BlockFi’s first crypto margin call occurs at a 70% LTV. That means your collateral value has dropped by 50% since initiation. At that time, the client has 72 hours to post additional collateral to bring the LTV back within a healthy range. Clients can also pay down their loan balance to fix the issue. If no action is taken, BlockFi will liquidate a portion of the collateral to lower the LTV back into the safe zone.
Why Do I Need to Stake Collateral for My Loan?
The main reason people need to stake collateral is for limiting risk. For the client, it can be easier to obtain a loan when you offer collateral in return. By staking collateral, you typically have access to more funding at better rates and don’t have to sell your assets to raise cash. It also makes it easier to get a loan overall.
For the lender, taking collateral provides peace of mind. When BlockFi lends money, we need to be confident that our clients will repay their loans. If we hold collateral, we lower our risk of repayment issues. More importantly, it allows us to offer clients some of the most competitive rates in the market.
Click here to learn more about collateralized loans.
Benefits of a BlockFi Loan
Our clients typically have short term funding needs but also see the value of their cryptocurrencies going up in the long term. Selling your crypto can also trigger tax consequences, making that option less desirable. As a result, some people are not interested in selling their Bitcoin (BTC), Ether (ETH), or Litecoin (LTC) to meet their financial goals. Instead, they will borrow against their crypto to get USD with BlockFi.
Our clients use their loan for a number of things. Some of our clients are first time home buyers. A BlockFi loan is a great way to fund a down payment on a real estate property. Other clients are small business owners and need an option for funding their business. BlockFi is also a great option for people looking to fund payroll or other business expenses. We even have clients that use BlockFi loans to fund their lifestyle. Travelling can be expensive, but accessing the value of your long-term crypto investments opens the door to finally booking that trip around the world you’ve been planning.
How Can You Get a BlockFi Loan?
You can apply for a crypto loan. After applying, you will receive a decision from our team within 1 business day. BlockFi clients often go from application-to-funding in as few as 90 minutes.