Why Onchain Crypto Collateral Can Get You Better Loan-To-Value Ratios
Fabian Dori, the chief investment officer at digital asset bank Sygnum, says that banks offering crypto-backed loans prefer crypto collateral in the form of onchain assets rather than exchange-traded funds (ETFs), and using onchain collateral can benefit borrowers.
Dori said that onchain assets are more liquid, allowing lenders to execute margin calls for crypto-backed loans on demand and offer higher loan-to-value (LTV) ratios to borrowers because the lender can liquidate the collateral in real-time. Dori told Cointelegraph:
“It’s actually preferable to have the direct tokens as collateral, because then you can do it 24/7. If you need to execute a margin call on an ETF on Friday at midnight, when the market is closed, then it’s more…
