Understand crypto-backed lending, manage risk with confidence, and make more informed decisions about your assets.
Practical perspectives on crypto-backed lending, market conditions, and making informed decisions with your digital assets.
Every crypto-backed loan has a number nobody prints on the front page: the percentage the collateral can fall before the lender asks for more. This article prints it. For five assets and five starting loan-to-value ratios, the tables below show the price fall that reaches the margin-call threshold and the fall that reaches liquidation, using Arvexo's published parameters. The formula is included so the figures can be checked or recalculated for any lender.
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Rehypothecation is a word most borrowers meet for the first time after it has already cost someone money. It means a lender taking the collateral you pledged and using it for its own business: lending it to a trading firm, posting it against its own borrowing, or putting it into a yield strategy. You still owe the loan. Your collateral is now somewhere else, and its return depends on someone you have never heard of.
"How much can I borrow against my crypto?" has a one-line answer: your collateral's value multiplied by the loan-to-value ratio you choose. The useful answer is longer, because the ratio you choose also sets your interest, the cash that lands in your account after the fee, and the price at which the lender asks for more collateral. This article runs three common holdings through all of it.
"A loan is not a sale, so it is not taxed" is the sentence that sells crypto-backed loans. It is true often enough to be dangerous. A crypto loan has five steps, and whether each one is taxable depends on the contract, the jurisdiction and what happens to the collateral. This article takes the five steps in order for US and UK taxpayers, states what the rules say, and marks where the rules run out.
Most borrowers plan the money coming in and not the money going back. Here is the full repayment timeline on one loan, on Arvexo's published terms, and the six things to settle before you sign.
During a crypto loan your collateral sits somewhere, under someone's control, on some legal basis. Those three facts decide whether you get it back. Here is what to ask, and how Arvexo answers.
A headline rate and the cost of your loan are two different numbers. Here is how to turn one into the other, with Arvexo's published terms worked through at five loan lengths.
Rates are the easiest thing to compare and the least important. These are the ten questions that decide whether your collateral is still yours in a bad month, with Arvexo's own answers where we have published them.
A crypto-backed loan lets you borrow cash against Bitcoin or other digital assets you already own, without selling them. This guide explains the steps, LTV, costs, margin calls, liquidation and who this kind of borrowing suits.
Loan-to-value, or LTV, measures how much you owe compared with the current value of the assets securing your loan. Borrow $50,000 against $100,000 of crypto and your starting LTV is 50%. If that collateral falls to $80,000, the same debt becomes a 62.5% LTV.
Borrowing against crypto can raise cash while keeping exposure to the asset. Selling raises cash without creating a repayment obligation. The comparison depends on tax, borrowing costs, how long you need the money and how you will repay it.
A falling crypto price can put a loan under pressure before the borrower expects it. As collateral loses value, the loan-to-value ratio rises. A margin call requires action; liquidation can mean the sale of some or all of the pledged assets.
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