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 market value of the collateral has decreased to 120% of the outstanding loan balance. Otherwise said, partial automatic loan repayments will start when the Loan-to-Value increases to 83.3%.
E.g. 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%
Value-to-Loan= (6000/5000)*100% = 120%
The total value of your crypto assets and the minimum amount which will trigger the small 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 for each 5% decrease starting at 140%. 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 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.) without any additional fees besides the exchange's fees. The funds received back from the exchange will be instantly applied towards your outstanding loan balancе.
The table below illustrates how the Value-to-Loan changes when a repayment is made - based on the percentage of sold collateral: