If the collateral assets decrease in value significantly, the client will be warned to add more collateral.
The client will be notified, and partial automatic loan repayments will only start after the Loan-to-Value increases to 83.3%.
If the loan amount is 5 000 USD then the partial automatic loan repayment will be initiated only when the value of your collateral decreases to less than 6 000 USD.
Loan amount: 5000 USD;
Value of collateral: 6000 USD;
Loan-to-Value = ($5000/$6000)*100% = 83.33%
The total value of your crypto assets and the minimum amount which will trigger the automatic loan repayments can be seen at any time below of all your crypto positions in your Nexo account.
The client will receive a minimum of three notifications (via SMS and email) before that. This will happen when the Loan-to-Value increases to 71.4%, 74,1%, 76.9%. The client will be prompted to deposit more crypto assets into their Nexo account to prevent partial automatic loan repayments.
Please note that the Nexo blockchain oracle will not sell all crypto assets at once. Sell orders are executed in small increments only as much as to rebalance the Loan-to-Value back within the limits. Sell market orders are made at the market price on leading cryptocurrency exchanges. The transaction is performed through API on some of the major exchanges (i.e. Bitstamp, Kraken etc.). The funds received back from the exchange, minus the exchange's fees will be instantly applied towards your outstanding loan balancе.
The table below illustrates how the Loan-to-Value changes when a repayment is made - based on the percentage of sold collateral (the price of crypto assets is constant):
Important: The notifications are sent for informational purposes. It is the client’s responsibility to keep track of their account standings and deposit more crypto assets or repay a part of the loan to prevent the initiation of partial automatic loan repayments.