What Is Crypto Collateral Safety Margin and How to Manage Liquidation Risk
Metric
What It Means
Why It Matters
Collateral Value
Market value of your deposited crypto
Determines borrowing capacity and risk exposure
Loan Amount
Capital currently borrowed
Fixed unless you repay or draw more
Current LTV
Loan ÷ collateral value
Real-time risk indicator
Liquidation LTV
Maximum allowed LTV
Point at which collateral is sold
Safety Margin
Gap between current LTV and liquidation LTV
Buffer against price volatility
Margin Alerts
Early warnings before liquidation
Time to add collateral or repay
Final Thoughts
The collateral safety margin is not a marketing term or a hidden feature. It is the practical expression of risk in crypto lending.
Understanding how it works—and managing it deliberately—is the difference between borrowing that supports long-term strategy and borrowing that becomes a forced exit. In volatile markets, safety margin is the foundation of control.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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