Our loan margin process is broken down into a three tier risk management system.
At a 65% LTV, you would get an email notification stating that your loan is approaching margin territory and we recommend action (but not required). We recommend keeping your LTV as close to 50% as possible, and price movements can occur rapidly. It is encouraged to keep assets in your Interest Account, so you could then move them to your Loan quickly if needed.
At a 70% LTV, you would enter a Margin Call. From there, you have 72 hours to cure your margin. If your margin is not cured within 72 hours or your loan hits an 80% LTV (even within the 72 hours), we will sell a portion of your collateral to bring your LTV back down to a healthy level.
- The fastest way to cure your margin is by sending additional collateral to your loan account immediately in order to prevent a potential liquidation. This is the only method BlockFi recommends.
- You may also pay down a portion of your loan balance, however cash moves much slower than crypto and we can only take actions based on the assets we have on the platform (ACH Payments to Scratch take 3-5 business days).
- Any assets in your Interest Account cannot be withdrawn if your Loan LTV is above 70%.
At an 80% LTV, you get another email notification stating your loan is in Default and subject to immediate liquidation.
- In accordance with your Loan and Security Agreement, your loan is now in Default and BlockFi will initiate a sale of your collateral to restore your LTV to a healthy level.
- Once your collateral has already been sold, the details of the sale will be made available within the next 12-24 business hours and you will then see your Dashboard update accordingly.
- Default Liquidations are not something we actively wish to do and would take as many steps as possible to avoid this if possible. This is why we strongly encourage clients to act quickly and keep their LTV as close to 50% as possible.
- BlockFi utilizes a variety of liquidity providers to execute these transactions in order to capture the best available price for our clients, which may vary from prices listed on public exchanges due to market conditions and volatility.
- To be clear, if 80% LTV is reached at any point, your loan will enter Default and collateral will be liquidated at BlockFi's discretion to bring your loan to a healthy level.