An over-collateralized loan may allow for a partial withdrawal, while an under-collateralized loan may be headed for a margin call.
The collateral-to-principal ratio (CTP)
The collateral-to-principal (CTP) ratio is the ratio of a loan’s collateral value to the principal amount. This is the inverse of loan-to-value (LTV) for a loan. The formula we use for CTP is:
CTP = (BTC/USD price × amount of BTC securing loan ) ÷ principal balance
Higher CTP can allow for a partial redemption of collateral
For loans where the collateral-to-principal (CTP) ratio is greater than 300%, you can request a partial collateral redemption back to a CTP of 250%.
How to withdraw bitcoin from an over-collateralized loan
- Log into your Unchained account.
- Navigate to your loan by clicking its name in the dashboard.
- If your CTP is greater than 300% and you have not requested a refund or received a margin call in the last 30 days, you will see the option to Withdraw collateral after clicking Collateral actions.
- If you would like to transfer collateral to a vault, you can enter the vault’s deposit address as the loan redemption address after clicking SHOW MORE in the upper-left tile.
Lower CTP can result in a margin call
For loans where the collateral-to-principal ratio is less than 150%, margin calls are issued.
175% CTP ratio
At a collateral-to-principal ratio of 175%, we send a courtesy email notification to advise borrowers of the status of their loan and encourage the improvement of the ratio by making a principal payment or adding additional bitcoin as collateral.
160% CTP ratio
At a collateral-to-principal ratio of 160%, a second courtesy email notification is sent. In order to avoid a margin call and in light of the timeline required to respond to a margin call, you may wish to deposit more collateral into the address for your loan and/or make a payment via wire transfer towards the principal balance of your loan upon receiving this notification.
We recommend that loan clients review our margin call process.
Learn: Read more in our Ultimate gate to bitcoin-backed loans.