Loan-to-Value Ratio: What It Is and How It Affects Crypto Loans

When you borrow crypto using your digital assets as collateral, the loan-to-value ratio, a measure of how much you can borrow compared to the value of your collateral. Also known as LTV ratio, it’s the silent rule that decides whether your loan gets approved—or if your assets get liquidated. Think of it like a mortgage: if your house is worth $100,000 and you borrow $70,000, your LTV is 70%. In crypto, it’s the same math—but with wilder swings and no bank telling you to calm down.

Most DeFi platforms and crypto lenders use LTV to protect themselves. If you put up $10,000 in ETH as collateral, they might let you borrow up to $6,500—that’s a 65% LTV. But if ETH drops 30%, your collateral value falls to $7,000. Now your loan is 93% of that value. That’s too high. The system will automatically sell part of your ETH to bring the LTV back down. This isn’t a glitch—it’s the whole design. Platforms like Aave, Compound, and even some centralized exchanges like Celsius (before it collapsed) all used LTV as their safety net.

Why does this matter to you? Because if you don’t understand LTV, you can lose your crypto even if you didn’t do anything wrong. You just held too much debt relative to your collateral’s value. Some platforms allow 80% or even 90% LTV for stablecoins, but those are risky bets. Others cap it at 50% for volatile tokens like SOL or ADA. Your LTV isn’t just a number—it’s a countdown timer. The more volatile the asset, the tighter the leash.

And it’s not just about borrowing. LTV also shows how safe a lending platform is. If a platform lets users go above 85% LTV without warning, that’s a red flag. If they automatically liquidate at 80%, that’s normal. If they let you go to 95% and then freeze withdrawals? That’s how you end up like the users of Altsbit or Blockfinex—locked out while your collateral gets auctioned off.

Some crypto loans even tie LTV to real-world use cases. For example, if you’re using your BTC to get a fiat loan for a car, your lender might demand a 30% LTV because they can’t instantly sell Bitcoin. Meanwhile, DeFi protocols don’t care about cars—they care about price feeds and smart contract logic. That’s why LTV rules vary wildly between platforms. One might use Chainlink for real-time data. Another might update prices every 12 hours. That delay can be the difference between keeping your assets and losing them.

And then there’s the human side. People borrow at 70% LTV thinking they’re safe. Then the market drops 20% in a day. They panic. They don’t add more collateral. They don’t pay down the loan. They just wait—and watch their position get wiped out. It’s not the market that kills you. It’s not understanding how LTV works.

Below, you’ll find real stories of people who got caught by LTV, platforms that got it right, and others that got it dangerously wrong. You’ll see how North Korean hackers used crypto loans to launder stolen funds, how Mexican users navigate lending under strict FinTech laws, and why a token like JUST (JST) on TRON became a popular choice for low-LTV stablecoin loans. You’ll also find warnings about fake platforms like Polyient Games DEX or Videocoin by Drakula—where no one checks LTV because there’s no real lending at all. This isn’t theory. It’s what’s happening right now in crypto lending. Know your LTV. Or lose your crypto.