What is a margin call and how does it work?
Nebeus loans use cryptocurrency as collateral which is locked to cover the amount of the loan according to your LTV. Collateral is used by the lender as insurance against the loan. When you enter into a loan backed by cryptocurrency you are agreeing to maintain an agreed-upon value. Depending on the Loan-to Value (LTV), this value will change. As an example:
If you are seeking to borrow $2000 at an 80% LTV, you will need to maintain a collateral value of $2500.
In the event, if the value of your collateral approaches a "Margin Call" (Minimum required to secure your loan) you need to increase the value of your crypto, by depositing more collateral. To do that you need to make sure that you select the box "When the crypto prices are falling" before completing your loan as you will not be able to change after. (Adding this feature will increase the interest rate).
If the market increases, the additional crypto is released back to you. To make this happen you need to select the "When the crypto prices are rising" before completing your loan as you will not be able to change after.(Adding this feature will increase the interest rate).
If you do not want to add more crypto to meet the collateral requirements, you have the option to close your loan. If you wish to do so, please contact Nebeus support. If we don’t hear from you our system will automatically liquidate your loan and payback the remaining crypto to your account. Liquidating your crypto refers to the sale of the crypto to pay back the loan, this is our last resort and only do so when completely necessary.
How does Health Loan Monitor work?
As the margin call approaches, the Liquidation Risk will increase. To calculate Liquidation Risk, we use two indicators Exchange rate at the time of loan issued (Initial Rate) and Exchange Rate for Margin Call (MarginCall Rate). The value of the difference Initial Rate - Margin call Rate = 100% ( Difference Rate Value). As the Liquidation Risk increases, the Difference Rate Value will decrease. Upon reaching the Difference Value of 20%, we inform you about the threat of Liquidation Risk.
What is Auto Margin Call Management?
Auto Margin Call Management is an option you can select when getting a Nebeus Flexible Loan. How does this work? If you turn on the Auto Margin Call Management option, Nebeus will monitor the price and volatility of the cryptocurrency that you are ...
How long do I have to react to a margin call?
If you have selected "When crypto prices are falling" option before you complete your loan, you still can react regarding a margin call, but you have to be super quick by adding collateral to your wallet. We recommend that you leave some extra ...
My collateral has been liquidated due to a margin call: what can I do?
When your loan approaches a margin call and your Crypto collateral is at risk of liquidation, you will be notified via email. However, if there is no action taken from your side by the moment of a margin call, there is still a way to avoid your ...
What are Nebeus Loan Health Monitors, and how do they work?
Nebeus gives you loan health monitors to stay continuously updated on the health status of your loans to ensure that your collateral never gets liquidated? What does your loan's health mean, and how is it calculated? When you get a Nebeus ...
What is Excess Collateral Release, and how does it work?
Excess Collateral Release is an extra option that you can select when getting a Nebeus Flexible Crypto-Backed Loan, which allows you to get part of your collateral back if cryptocurrency prices rise by more than 10%. How does Excess Collateral ...