Introduction to Crypto Loans

Flexible Rate Loan allows you to borrow crypto without locking into a fixed term, providing you with more flexible access to liquidity. Unlike Fixed Rate Loan, Flexible Rate Loan only supports borrowing — supplying assets isn't available.

How It Works

1. Borrowing

Let's illustrate this with an example. Suppose Alice expects BTC to rise and needs extra funds to seize an opportunity. She has 30 ETH in her Funding Account but doesn't want to sell it just yet. With Flexible Rate Loan, Alice can use her ETH as collateral to borrow BTC with no fixed term.

The loan parameters are as follows:

Calculation Formula

Borrowable amount = Collateral amount × Collateral value ratio × Initial LTV ÷ Exchange rate

Using the formula, Alice borrows 0.48 BTC with her 30 ETH:

30 ETH × 100.00% × 80% ÷ 50 = 0.48 BTC

2. Interest Accrual

The interest for Flexible Rate Loan is calculated using a floating hourly interest rate, and it compounds hourly. This means that the interest from the previous hour is added to the loan amount, and the updated total is then used to calculate the interest for the next hour. Any period less than one hour will be rounded up to one hour.

Calculation Formula

Hourly Interest = Loan amount × Hourly interest rate

Loan amount = Principal + Accrued interest

Total Interest = Sum of all hourly interest amounts

Example

Suppose you borrow 1,000,000 USDT. The initial hourly interest rate is 0.0003%, and it may change over time.

1. First hour

Hourly interest rate: 0.0003%

Interest = 1,000,000 × 0.000003 = 3 USDT

New loan amount = 1,000,000 + 3 = 1,000,003 USDT

1. Second hour

The hourly interest rate rises to 0.00032%.

Interest = 1,000,003 × 0.0000032 ≈ 3.2 USDT

New loan amount = 1,000,003 + 3.2 = 1,000,006.2 USDT

1. Subsequent hours

Interest continues to compound based on the updated loan amount.

3. Collateral

You can choose eligible assets from your Funding Account to use as collateral. The collateral value will be calculated in USD based on Index Price and tiered collateral value ratio.

Calculation Formula

Collateral Value = (Tier1 amount × Tier1 ratio) + (Tier2 amount × Tier2 ratio) + ... + (TierN amount × TierN ratio)

1. Each tier amount refers to the portion of the asset's USD value that falls within that specific tier.
2. Each tier ratio is the corresponding collateral value ratio applied to that tier.

Example

If John uses 6,000,000 MYRO as collateral, and MYRO is priced at $0.06, the collateral value will be calculated as follows:

USD Value (based on Index Price) = 6,000,000 × $0.06 = $360,000

Collateral Value (based on Index Price) = $100,000 × 100% + ($200,000 – $100,000) × 75% + ($300,000 – $200,000) × 50% + ($360,000 – $300,000) × 0% = $225,000

Note: The example above is for illustrative purposes only. For details on supported collateral assets and the tiered collateral value ratio, please check here.

4. Liquidation

The Liquidation LTV is the threshold at which your collateral will be automatically liquidated to repay the loan and minimize risk.

If the order reaches the Liquidation LTV, currently set at 95%, the liquidation process will be triggered immediately, and any pending loan orders will be canceled first. If the LTV drops to 95% or lower after cancellation, the liquidation will stop. Otherwise, forced repayment will be initiated, selling the collateral assets to repay the loan. The conversion rate will be calculated based on the Index Prices of both the collateral asset and the debt asset.

In the case of forced repayment, a 2% liquidation fee of the loan amount will be charged and deducted from the collateral. Any remaining collateral after the liquidation will be returned to your Funding Account. If your collateral is converted to repay the loan, a repayment fee will be applied. The fee rate is the higher between the repayment fee rates for the collateral asset and the debt asset.

For more information on Crypto Loans, refer to the following articles:

1. FAQ — Crypto Loans
2. How to Get Started With Crypto Loans
3. Loan-to-Value Ratio and Liquidation (Crypto Loans)