Recommended Loan Value (LTV)
Why do we need to set the LTV factor?
In the crypto world, we often use the over-collateralization mechanism for lending. For example, if you put $100 ETH in AAVE, you can lend 75% of the corresponding values.
The lower the LTV setting, the lower the Borrower's capital utilization, but the more secure it is for Lender and the protocol. Factors that affect LTV include the ease of collateral (NFT) sale, the volatility of collateral value and the volatility of borrowed assets, etc.
Currently, we recommend that the LTV of NFT collateral is set to 20%.
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