Loan To Value

Loan To Value (LTV) is a number that indicates how much you can borrow based on your collateral.

The health factor is calculated on the basis of the LTV.

Here is a simple example to understand LTV:

-You deposit a $5,000 NFT

-If the LTV is 60% you can borrow up to 60% of the value of your NFT, so in this case $3000

-If the LTV exceeds 80% (and therefore the value of the NFT falls) you risk being liquidated.

The LTV must reach at least 80% to be at liquidation risk, this 80% is called the liquidation threshold.