Understanding Loan-to-Value (LTV): Clapp.Finance's Approach to Safeguarding Your Collateral

Understanding LTV in Crypto Lending: Loan-to-Value (LTV) is a critical metric in crypto lending that measures the ratio of borrowed funds to the value of collateral, dynamically changing with market prices and influencing liquidation risk.

Risk Management with LTV: Clapp.Finance utilizes LTV as a real-time risk management tool, linking interest rates to LTV levels to ensure that higher borrowing risks are met with higher costs, thereby promoting safer lending practices.

Liquidation Process on Clapp: Liquidation occurs automatically when LTV reaches a defined threshold, ensuring that loans remain fully covered by collateral, with a focus on user protection rather than punitive measures.

Proactive User Control: Clapp emphasizes active monitoring of LTV, providing users with notifications and options to manage their collateral and loan exposure, fostering a transparent and user-centric borrowing environment.