The coin price hasn’t fallen, so why has my borrowing limit shrunk?
Binance announced on October 6 that it plans to adjust the collateral ratios for certain assets starting at 14:00 Beijing time on October 9. The changes are expected to take about 30 minutes to complete. The ratios for BCH, ENA, and ONDO will increase from 50% to 60%, while WCT’s will drop from 30% to 10%.
What’s changing here is how much collateral value the platform recognizes—not the market price of the coins.
For example, suppose you hold WCT worth $1,000. At a 30% ratio, its collateral value is $300. Once the ratio changes to 10%, that value becomes $100. The amount of coins you hold and their price haven’t changed, but the borrowing capacity they support has shrunk.
But it’s important to distinguish between account types. For cross margin, the announcement describes changes to the amounts available to borrow and transfer out. Unified Accounts are also affected by the unified maintenance margin ratio. You shouldn’t lump these two effects together and say “liquidation is imminent.”
What I’m watching is the collateral composition and remaining borrowing capacity before and after the rules take effect. Borrowing capacity backed by a single collateral asset is affected by both its price and the applicable discount rules. And a higher collateral ratio doesn’t mean you have to borrow more.
Beyond what an asset is worth, you also need to consider how much of that value is recognized in your current account.
$BCH $ENA $ONDO
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Binance announced on October 6 that it plans to adjust the collateral ratios for certain assets starting at 14:00 Beijing time on October 9. The changes are expected to take about 30 minutes to complete. The ratios for BCH, ENA, and ONDO will increase from 50% to 60%, while WCT’s will drop from 30% to 10%.
What’s changing here is how much collateral value the platform recognizes—not the market price of the coins.
For example, suppose you hold WCT worth $1,000. At a 30% ratio, its collateral value is $300. Once the ratio changes to 10%, that value becomes $100. The amount of coins you hold and their price haven’t changed, but the borrowing capacity they support has shrunk.
But it’s important to distinguish between account types. For cross margin, the announcement describes changes to the amounts available to borrow and transfer out. Unified Accounts are also affected by the unified maintenance margin ratio. You shouldn’t lump these two effects together and say “liquidation is imminent.”
What I’m watching is the collateral composition and remaining borrowing capacity before and after the rules take effect. Borrowing capacity backed by a single collateral asset is affected by both its price and the applicable discount rules. And a higher collateral ratio doesn’t mean you have to borrow more.
Beyond what an asset is worth, you also need to consider how much of that value is recognized in your current account.
$BCH $ENA $ONDO
Tap my profile picture to view my live copy trading
