What is the Collateral?

1. What is the collateral? 

When collateral, the possession of the secured property is owned by the pledge institution. When certain conditions stipulated in the contract are met, the pledge institution has the right to deal with the collateral.

2. What is LTV？How to calculate LTV?

The pledge rate refers to the ratio of the debt amount to the value of the collateral.

                  (Principle+Total Interest+Total Penalty Interest-Repaid Amount)

LTV=   --------------------------------------------------------------------------------------------- ×100%

                   Collateral (Crypto asset) reference price×Collateral (Crypto asset) Amount

For more detail, please check App.

3. Why set an initial LTV?

On one hand, this will prevent the risk of default.  On the other hand, Matrixport will make up the loss of borrower default and the cost caused by processing the collateral.

In the bear market,  in order to prevent the collateral decreasing price, Matrixport will take more frequent measures to maintain the initial LTV. If customers don't have enough collateral balance, the collateral is at the risk of being sold. So a reasonable initial LTV will ensure customers get back their principle.

4. Is the LTV as high as possible?

The answer is No. The initial LTV will be affected by the spread of futures and spot market, price fluctuations range and the trend.

When the collateral value falls, the denominator in the formula becomes smaller and the LTV increases accordingly.

A higher the LTV means a higher possibility of liquidation, so a reasonable LTV can effectively prevent the occurrence of liquidation.

5. What should customers do if the LTV increases?

If the LTV increases to a certain level, customers need to supplement collateral to increase the collateral total value. This is achieved by enlarging the denominator. Such action maintains the initial LTV and prevents it from reaching the warning line or the liquidation line.