What is a Crypto Loan
The crypto loan is a financial service that CoinEx provides to meet users' short-term liquidity needs. Users can borrow cryptos using one or more kinds of crypto collateral, without selling their crypto assets. The borrowed assets can be used for trading, investment in financial management products, or withdrawals.
Advantages of CoinEx Crypto Loans
1. High LTV (Loan-to-Value Ratio)
Compared to other platforms, CoinEx offers a higher initial loan-to-value ratio. You can borrow more by adding collateral assets of the same value, which improves the utilization rate of your funds.
2. Instant arrival
The loan will be credited immediately, no need to wait.
3. Borrow and repay freely
There is no fixed term for the loan or additional fees for overdue repayment, and the loan repayment is flexible and available at any time.
4. Diverse collateral
Multiple cryptos are supported as loan collateral. When borrowing a particular crypto, you can use more than one crypto as collateral at the same time, simple and convenient.
Key Concepts of CoinEx Crypto Loans
1. Loan-to-value ratio (LTV)
The loan-to-value (LTV) is a key indicator for assessing the risk level of your loan size.
Current LTV = To-be-repaid loan amount (loan + interest) / Collateral value * 100%
CoinEx evaluates risks based on the following three LTVs:
- Initial LTV: The initial LTV determines the maximum amount that can be borrowed based on a certain amount of collateral. The maximum borrowable asset value = Effective collateral value * Initial LTV.
- Alert LTV: When the current LTV ≥ the alert LTV, the system will prompt you to add more collaterals.
- Liquidation LTV: When the current LTV ≥ the liquidation LTV, the system will automatically sell your collateral to repay the loan.
2. Discount rate
The discount rate is set by the risk rate of the collaterals and used to calculate collateral value. Practical collateral value = Collateral market value * Discount rate.
For example, the discount rate of BTC is 90%, and the initial LTV is 70%; To borrow USDT with a $100 BTC collateral, then:
BTC effective collateral value = 100 * 90% = 90 USDT
Maximum loan = 90 * 70% = 63 USDT
3. Upper limit of collateral value
Each loanable coin has a value limit, meaning, the calculated effective collateral value cannot exceed this limit, regardless of how many cryptos are used as the collaterals.
Loan Fee Description
1. Loan interest rate
The interest rate is fixed for each loanable crypto. Please check the loan page for details.
2. Interest calculation
Once the loan is successful, 1 hour of interest is generated immediately. After that, the interest is calculated at every o'clock based on the to-be-repaid loan amount, without compounding unpaid interest.
- Initial interest = Single loan amount * Daily interest rate / 24
- Subsequent hourly interest = Current to-be-repaid loan amount * Daily interest rate / 24
3. Loan term
There is no fixed term for CoinEx loans or overdue fees. Loan repayment is flexible and available at any time.
If a crypto used as collateral for a loan undergoes an airdrop, fork, or other event that generates new assets, the specific rules regarding how those new assets will be handled will be subject to real-time announcements.
1. Repayment rules
(1) Full and partial repayments are supported.
(2) Interest is repaid first, followed by principal.
(3) After full repayment, the collateral will be returned.
2. Repayment methods
(1) Default repayment is to repay with the borrowed coin, i.e. repaying with the same coin that was borrowed.
(2) You can also repay with the collateral. However, this method only supports full repayment, not partial. Your collateral will be systematically swapped to the to-be-repaid assets and directly used for loan repayment until the debt is fully repaid.
About Insurance Fund
Crypto loans and margin trading share the same insurance fund, which is funded through two sources:
(1) A portion of the daily interest earned on crypto loans and margin borrowing.
(2) The liquidation fees charged from loans or margin liquidation due to falling collateral values.
CoinEx reserves the right to allocate platform revenue towards the insurance fund using alternative methods in the future, apart from those mentioned above.
About Forced Liquidation
1. Trigger conditions
The forced liquidation will be triggered when the current LTV ≥ the liquidation LTV and the system will automatically sell your collateral to repay the loan. Please add collateral in time to avoid forced liquidation.
2. Liquidation rules
(1) Liquidation order
When there are multiple collaterals, they will be swapped to the borrowed coin in the system-defined order until the debt is fully repaid.
(2) Liquidation fee
The liquidation fee is calculated and collected after a loan position has been liquidated.
Liquidation fee = To-be-repaid assets (loan + interest) * 2%
It is then converted into quantities of the collateral coins based on the index price. The fee is charged by liquidating the collateral coins in the predefined sequence until the full fee amount has been taken.
The collected liquidation fees are transferred to the insurance fund of the corresponding coin.
(3) Liquidation outcome
After liquidation and collecting the liquidation fee, the remaining collateral will be returned, if there is any.
However, when the collaterals are used up, yet the debt is not fully repaid, the insurance fund will automatically cover the repayment. In this case, no liquidation fee will be charged after liquidation.