Crypto Loan LTV & Liquidation Calculator

Frequently Asked Questions

What is LTV on a crypto loan?

Loan-to-Value = loan amount ÷ collateral value. As collateral price falls, LTV rises; when it hits the platform's liquidation LTV your collateral is sold.

How is the liquidation price found?

Liquidation price = loan ÷ (collateral units × liquidation LTV). The calculator also shows the buffer between today's price and that level.

How do I avoid liquidation?

Borrow well below the max LTV, add collateral or repay as price falls, and watch volatility. A 30–40% starting LTV gives meaningful cushion.

What happens at liquidation?

The platform force-sells collateral (often with a penalty fee) to repay the loan - usually at the worst possible time. This is educational, not financial advice.

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Estimates for informational purposes only.

Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How This Calculator Works

A crypto-backed loan is governed by its loan-to-value ratio: LTV = loan amount ÷ (collateral quantity × collateral price). Because the collateral is volatile, its price - and therefore your LTV - moves constantly. Every lender sets a liquidation LTV; the instant your LTV reaches it, the protocol force-sells collateral to repay the debt and protect the lender. Setting loan ÷ (quantity × liqPrice) = liquidation LTV and solving gives the liquidation price = loan ÷ (quantity × liquidation LTV). The same algebra at a lower margin-call LTV yields the earlier price at which you are merely warned to add collateral or repay. The price buffer - (current price − liquidation price) ÷ current price - is the percentage the collateral can fall before you are liquidated.

Worked Example

Post 2 BTC at $30,000 → collateral value = 2 × 30,000 = $60,000. Borrow $20,000. Current LTV = 20,000 ÷ 60,000 ≈ 33.3% - conservative. With an 85% liquidation LTV: liquidation price = 20,000 ÷ (2 × 0.85) = 20,000 ÷ 1.7 ≈ $11,765, so BTC can fall (30,000 − 11,765) ÷ 30,000 ≈ 60.8% before forced sale. A 75% margin-call LTV triggers a top-up request at 20,000 ÷ (2 × 0.75) ≈ $13,333 - a roughly $1,500 warning zone above the liquidation line where you still have time to act.

Real-World Use

Borrowers on Aave, MakerDAO/Sky, Nexo, or centralized lenders use this to size a loan so an ordinary drawdown does not wipe them out, and to choose collateral assets whose volatility their buffer can absorb. A common pattern is borrowing stablecoins against held BTC/ETH to access liquidity without selling (and without triggering a taxable disposal). The buffer % is the number to manage: a 60% buffer survives most corrections, while a sub-20% buffer means a single bad weekend - especially during a market-wide cascade when prices and liquidity both deteriorate at once - can liquidate you at the worst possible moment.

Common Mistakes

Borrowing near the maximum LTV. It maximizes capital efficiency and minimizes survivable downside - a routine 15–20% dip can be fatal.

Assuming liquidation happens exactly at the math price. Oracle lag, price-feed smoothing, slippage on the forced sale, and a liquidation penalty (often 5–15%) all make the realized outcome worse than the clean threshold.

Forgetting interest compounds the debt. Accrued borrow interest silently grows the loan balance, pushing LTV up over time even if collateral price never moves - a position can drift into liquidation while you do nothing.

Single-asset thinking on multi-collateral platforms. Correlated collateral can all fall together, evaporating a buffer that looked safe per-asset.

Limitations

This models one collateral asset and one loan, and ignores accruing interest, liquidation penalties/fees, partial (tranche) liquidations, gas costs, and platform-specific oracle and time-weighted-price mechanics. Real protocols may liquidate only a portion to restore health, or use a delayed price feed that liquidates at a stale level. Treat every figure as an educational estimate of liquidation risk, not financial advice - leveraged crypto positions can be liquidated rapidly, irreversibly, and at prices well below the theoretical threshold.

Crypto Loan LTV & Liquidation Calculator

Frequently Asked Questions

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