Loan to value
How much you can borrow against a coin, and why each coin gets its own number.
What it means
Loan to value is the SOL you borrow divided by the value of the coins you lock. At a 25% limit, coins worth 1,000 dollars let you borrow up to 250 dollars of SOL.
Your loan to value moves with the coin's price. The limit is where you can start; the liquidation line is where it ends.
From risk score to limit
The desk gives every covered coin a risk score from 0, the safest, to 100 (see how the AI sets limits). The score picks the limit:
| Risk score | Loan to value limit | Liquidation line |
|---|---|---|
| 0 to 14 | 30% | 45% |
| 15 to 29 | 25% | 40% |
| 30 to 44 | 20% | 35% |
| 45 to 59 | 15% | 30% |
| 60 to 71 | 10% | 25% |
| 72 and over | Loans paused | n/a |
A coin has to move 3 points past a band edge before its limit changes, so a coin sitting right on an edge does not flip back and forth every check.
The coin cap
Each coin also has a cap: the most SOL lent against it across all borrowers. It is sized so that selling every loan's collateral at the liquidation line would move the coin's price by about 10% or less in its pool. Deep pools get big caps, thin pools get small ones.
In numbers: about one eighteenth of the pool's liquidity can be sold for a 10% move in a two sided pool, and the cap is that amount times the liquidation line, in SOL.
An example
You lock 1,000,000 coins priced at $0.002, worth $2,000. At 25% you can borrow up to $500 of SOL.
You borrow $400. Your loan to value is 20%. The liquidation line is 40%, which you reach if the coins fall to $0.001, half the price you borrowed at.