What is LTV?
LTV stands for Loan-to-Value. It's just a way of comparing two numbers:
How much money you borrowed
How much your crypto (used as collateral) is worth
LTV tells you what percentage of your crypto's value you've borrowed.
Example: If your crypto is worth ₦100,000 and you borrow ₦50,000 against it, your LTV is 50%. You've borrowed half the value of what you put up.
Why does it matter?
Crypto prices move up and down. Sometimes a lot, sometimes fast. If you have an active loan, your LTV moves with it.
If the price of your crypto goes up, your LTV goes down. This is good, since your loan becomes safer relative to your collateral.
If the price of your crypto goes down, your LTV goes up. This means your loan is now a bigger share of your collateral's value, which is riskier.
Why should you care?
Every loan has a maximum LTV it can reach. If your LTV climbs too high because your crypto's price drops, it means your collateral can no longer safely cover your loan.
When this happens, you may be asked to:
Add more collateral, or
Repay part of the loan
If LTV gets too high and nothing is done, the loan will be automatically closed out by liquidating your crypto to protect both sides.