DeFiIntermediate

Loan-to-value

A loan’s value relative to its collateral value, often expressed as a percentage.

PLAIN-ENGLISH DEFINITION

In more detail

LTV helps you see how much of a collateral position has been borrowed against. Protocols also use a maximum LTV parameter to limit new borrowing. That borrowing cap isn't necessarily the liquidation threshold, so don't use one number for both decisions. Changes in collateral prices or debt can change your actual ratio.

IN THE WILD

How you might use it

With $400 of debt against $1,000 of collateral, your current LTV is 40%; you check the protocol’s separate borrowing and liquidation limits.

A tall lilac collateral-value column labelled $1,000 stands beside a roughly forty-percent-height lime debt column labelled $400; the plaque shows $400 divided by $1,000 equals 40%.
Illustrated by Crypto DictionaryAI-generated artwork
WORD NOTES
Short name
LTV

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