If the value of your collateral drops significantly, your loan’s LTV ratio increases, raising the risk of collateral liquidation.
Note: In traditional finance, these notifications are sometimes called "margin calls." At Ledn, we refer to them as LTV notifications. If you searched for "margin" or "margin call," this is the right article.
Monitoring and Alerts:
Notifications: Ledn sends an email when your LTV exceeds 70%, advising you to add more collateral or repay part of the outstanding balance. These notifications are critical warnings. You should take action immediately upon receiving them.
Additional Reminders: Further alerts follow if your LTV reaches 75%.
Action Required:
When you receive an LTV notification, you have two options to bring your LTV back to a healthy level:
Enable Auto Up
Top up your loan: Deposit additional bitcoin collateral to increase the value backing your loan, which lowers your LTV.
Make a partial or full repayment: Pay down a portion (or all) of your outstanding balance. This directly reduces your LTV.
Important: Sending collateral to your loan wallet does not immediately lower your LTV. The deposit must be confirmed on the blockchain before it is reflected in your loan's LTV and collateral balance.
Proactive Management: We strongly recommend that you regularly monitor your LTV and add more collateral even before reaching 70% LTV.
Also consider enabling Auto Top-Up to remove the need to manually monitor and manage your open loans’ status during times of price volatility.
Automatic Liquidation at 80% LTV:
If your LTV reaches or exceeds 80%, Ledn will automatically sell a portion of your collateral to cover the outstanding loan balance. This is important to understand:
Liquidation is automatic. It is triggered by the system and cannot be stopped once initiated.
Liquidation is irreversible. Once your collateral has been sold, the transaction cannot be undone.
A 0.50% trade spread is applied to the BTC price during liquidation.
Any remaining collateral after the loan balance and accrued interest are covered will be returned to your Transaction Account.
Do not wait until 80% to take action. LTV can move quickly during periods of bitcoin price volatility.