How does my collateral value impact my loan?

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:

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

1. Log into your Unchained account.
2. Navigate to your loan by clicking its name in the dashboard.
3. 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. 
   1. 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.