Loan health is determined by the loan-to-value (LTV) ratio and the liquidation loan-to-value (LLTV) threshold. Together, these determine the risk of liquidation for your crypto-backed loan.
Loan to value (LTV)
LTV is the ratio of the total outstanding amount of your loan (including principal and all accrued and unpaid interest) to the current market value of your collateral.
Example: If you borrow $100 against $1,000 of collateral, your LTV is 10% ($100 / $1,000).
LTV decreases when you repay your loan or your collateral increases in value.
Low LTV indicates good loan health and reduces the risk of liquidation.
LTV increases as interest accrues, when you borrow more, or when your collateral drops in value.
High LTV increases the risk of liquidation.
Liquidation LTV (LLTV)
LLTV is the LTV threshold that will lead to automatic liquidation if reached.
Each Morpho market has a predetermined LLTV, which is displayed in your loan overview.
As your loan LTV approaches the market’s LLTV (e.g., as interest accrues, or the value of your collateral falls), you need to add more collateral, or repay all or a portion of your loan to avoid liquidation.
Loan health levels
Loan health | % of LLTV threshold | Example LTV (based on 86% LLTV) | Recommended action |
Good | 0-60% | < 51.6% | • Monitor LTV • No immediate action required |
Fair | 60-90% | 51.6% - 77.4% | • Monitor LTV |
Danger | 90-100% | 77.4% - 86% | • Add collateral or repay to avoid liquidation (Coinbase will send an email notification) |
Liquidated | 100% | > 86% | • Review loan status to determine if remaining collateral is available for withdrawal |
Note: The loan health levels above are intended to be informational. Monitor the status of your loan regularly to ensure your collateral doesn’t get liquidated. You can improve loan health by adding more collateral or repaying all or a portion of your loan.
Loan health considerations
Crypto volatility: If your collateral value drops relative to your loan's principal, your loan health decreases.
Interest rates: Interest rates on onchain protocols vary with supply and demand. Since interest accrues continuously, rising rates will increase the outstanding amount of your loan more quickly. Monitor these rates and adjust your repayment strategy accordingly.
Loan management
You can view your loan details (including loan health), make payments, add collateral, borrow more funds, and manage related notifications from the loan management page in the mobile app.
Sign in to the Coinbase mobile app.
From the My assets tab, select the asset you’re using for collateral. Currently, BTC is the only option.
Go to Collateral and select your collateral balance to open the loan management page.
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