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@ mattaroo
2025-05-01 16:28:33
Borrowing against your Bitcoin example:
https://image.nostr.build/d670e93b871528d55fbde1c73b807083ff9883e3fc0e9f63689deb129cbf9b81.png
Here is a breakdown of the key elements of the Loan:
Loan Amount (Borrowed):
$97,000 (or 97,000.002736 USDC - which can be used to do anything include buy more BTC, Real Estate, Car... etc)
Collateral:
2.20586409 BTC, valued at $194,027.20 at the time of the loan.
Stored in Morpho, a decentralized lending protocol.
Loan-to-Value (LTV) Ratio:
Current LTV: 49.98% ($97,000 borrowed / $194,027.20 collateral).
Liquidation LTV: 86%. If the LTV exceeds 86%, the collateral may be liquidated. THIS PART IS KEY!!!
https://image.nostr.build/06e99c2e4aa9fe2827af81889b25812fafa05fa999eea9a70d22171ec0beee99.png
Interest Rate:
5.05% variable APR (Annual Percentage Rate), meaning the rate can change over time. This is very low compared to trad banks
Loan Health:
Currently marked as "Good," as the LTV is well below the liquidation threshold of 86%.
Liquidation Price:
$51,132 per BTC. If Bitcoin’s price drops to this level, the LTV will hit 86%, triggering liquidation of the collateral. This loan is very far away from liquidation, which is the most important point of this type of borrowing.
Repayment Terms:
Flexible repayment schedule ("pay back on my own schedule").
Options to make payments or borrow more are available.
Tax Advantage:
The loan is normally a non-taxable event, as borrowing against crypto typically doesn’t trigger a taxable sale (unlike selling BTC).
Process:
No credit check, only BTC collateral required.
Funded immediately, taking just 5 minutes.
Source: Invest Answers