I used to read an 80% MLTV as if it meant I still had 20% room before liquidation.
TermMax's documentation makes a different distinction. MLTV sets the maximum debt that can be opened against the collateral, while LLTV determines when a position becomes eligible for liquidation based on its current LTV.
Take a position with 80% MLTV and 85% LLTV. At the maximum borrowing level, $1,000 of collateral supports $800 of debt. If the collateral falls to $941, that same $800 debt now represents roughly 85% LTV — right at the liquidation threshold.
That changed how I think about the MLTV number. The distance between the borrowing ceiling and the liquidation threshold is what matters once the position is open. Using the full 80% ceiling leaves only a 5-percentage-point LTV gap to an 85% LLTV.
I don't think this means MLTV is misleading. It answers a different question: how much can I borrow? LLTV answers the later question: when does the position become eligible for liquidation?
The important distinction isn't the 80% ceiling by itself, but how much of that ceiling is used relative to the liquidation boundary.
If MLTV tells me how much I can borrow while LLTV tells me when liquidation begins, should I think of the gap between them as the real risk buffer?
@TermMax #TermMax #termmax @TermMax
#BitcoinBestWeekSinceMarch2023 #SpotGoldHitsHighestSinceMay15 #TrumpPressesCongressToPassClarityAct $BTC $ETH
TermMax's documentation makes a different distinction. MLTV sets the maximum debt that can be opened against the collateral, while LLTV determines when a position becomes eligible for liquidation based on its current LTV.
Take a position with 80% MLTV and 85% LLTV. At the maximum borrowing level, $1,000 of collateral supports $800 of debt. If the collateral falls to $941, that same $800 debt now represents roughly 85% LTV — right at the liquidation threshold.
That changed how I think about the MLTV number. The distance between the borrowing ceiling and the liquidation threshold is what matters once the position is open. Using the full 80% ceiling leaves only a 5-percentage-point LTV gap to an 85% LLTV.
I don't think this means MLTV is misleading. It answers a different question: how much can I borrow? LLTV answers the later question: when does the position become eligible for liquidation?
The important distinction isn't the 80% ceiling by itself, but how much of that ceiling is used relative to the liquidation boundary.
If MLTV tells me how much I can borrow while LLTV tells me when liquidation begins, should I think of the gap between them as the real risk buffer?
@TermMax #TermMax #termmax @TermMax
#BitcoinBestWeekSinceMarch2023 #SpotGoldHitsHighestSinceMay15 #TrumpPressesCongressToPassClarityAct $BTC $ETH