The LTV ratio is the Loan To Value ratio which is the maximum loan Balanced will allow a depositor to take for that collateral.
At the moment the LTV for ICX when minting bnUSD is 66.67%, ETH 30%, and BTC 20%.
These values made sense initially as the bridging was new and unproven. Now with a few months with it being active, I think we can safely raise the LTV.
If people are in agreements we should also discuss the exact values. Normalising all 3 at 66% sounds reasonable or 50% for BTC/ETC?
Is there an argument that ~66% is too conservative?
There is no real need for Balanced to ‘protect the user from themselves’ just that in the event of a liquidation there is enough time/buffer for the liquidation process to play out without putting the platform at risk.
In that respect, do we need to consider current liquidity in LPs when determining the LTV ratio for a collateral? I am actually not 100% sure about the ramifications of liquidations if the pool is shallow. I’m thinking it shouldn’t matter as long as the bridges are fine?