Welcome to the first Crypto Life Highlights! 🥳
We’re excited to release the very first monthly edition of Crypto Life Highlights!
Today we’re going to talk about how you can spend without selling your crypto with Cryptodraft.
Here’s what you need to know…
What is a Cryptodraft? 🤔
A Cryptodraft is a great way to borrow against your crypto without selling your assets. You can instantly open a line of credit while using your crypto as collateral, with rates starting from 0%!
How does Cryptodraft interest work? 👀
The interest of your Cryptodraft is determined by the level of your LTV (loan-to-value). Put simply, an LTV ratio refers to the percentage of your collateral value that you borrow against. Your LTV will either increase or decrease depending on the value of your collateral. If your crypto’s value decreases, your LTV will go up, meaning more interest will need to be paid.
- John opened his Cryptodraft on January 2nd.
- John’s LTV is recorded at 10% on February 2nd, 01:00 (UTC).
- Then, John is given a 0% Monthly Payment Rate (MPR).
- If John’s LTV increases above 12%, he will be charged a 1% MPR for the amount which exceeds 10%. In this example, that would be 2% of his LTV. The original 10% will always be interest-free.
Can you change your LTV? 📉
You can change the level of your LTV by adding more collateral to your Cryptodraft. The more collateral you add, the lower your LTV and the less interest you’ll need to pay.
- Jack opened his Cryptodraft on August 9th.
- Jack has a $2,000 Cryptodraft and $10,000 in collateral, making his LTV 20%.
- Jack adds an extra $5,000 to his collateral before the end of his monthly cycle, making his LTV 13.33%.
- Jack is charged an MPR of 1% on the first 3.33% of his collateral value, as the first 10% LTV is always interest-free!
That’s a wrap! 👏
That’s all we have for this month’s round up. Make sure to stay tuned for our next edition!