As the crypto market continues to evolve, investing is no longer limited to buying and selling digital assets. Today, there are financial tools that allow investors to unlock liquidity without selling their crypto — one of the most popular options is Crypto Lending.
However, for beginners, technical terms can make the process feel overwhelming. This article from the Liberix Knowledge Hub introduces 5 essential crypto lending terms you should understand before getting started, helping you navigate the Liberix platform with greater confidence.
What Is Crypto Lending?
Crypto lending is a financial service that allows users to use their digital assets as collateral to borrow fiat currency (such as Thai Baht) without selling their crypto holdings.
This approach helps investors:
- Maintain long-term investment positions
- Access liquidity for personal or financial needs
- Avoid selling assets during volatile market conditions
Before using crypto lending services, it’s important to understand the key terminology behind the system.
1) Collateral
Collateral refers to the digital assets you pledge as security for a loan.
Common examples include:
- Bitcoin (BTC)
- Ethereum (ETH)
- Solana (SOL)
The market value of your collateral determines both your borrowing limit and the risk level of your loan. If asset prices change, the system recalculates the loan metrics accordingly.
2) LTV (Loan-to-Value)
LTV represents the ratio between the loan amount and the value of the collateral.
Example:
- Collateral value: 100,000 THB
- Loan amount: 50,000 THB
- LTV: 50%
In general:
- Lower LTV = lower risk
- Higher LTV = higher risk
On the Liberix platform, users can choose an LTV level that aligns with their personal risk tolerance.
3) Margin Call
A Margin Call is a system alert triggered when the value of your collateral drops and your LTV approaches a risk threshold.
When receiving a margin call, users may:
- Add more collateral
- Partially repay the loan
These actions help stabilize the loan and prevent liquidation.
4) Liquidation
Liquidation is a risk management mechanism where a portion of the collateral is sold automatically when the LTV exceeds the allowed limit.
The purpose of liquidation is to:
- Protect the system from excessive losses
- Maintain overall platform stability
Managing your LTV carefully and monitoring your loan status can significantly reduce the risk of liquidation.
5) APR / Monthly Rate
Interest-related terms commonly used in crypto lending include:
- APR (Annual Percentage Rate): the annual interest rate
- Monthly Rate: the interest charged per month
Understanding how interest is calculated helps borrowers accurately assess the cost of borrowing.
Liberix displays interest rates transparently, allowing users to plan their finances with clarity and confidence.
Summary: Start Crypto Lending with Confidence on Liberix
Understanding these five essential crypto lending terms is the first step toward using crypto-backed loans effectively.
Once you understand Collateral, LTV, Margin Call, Liquidation, and interest rates,
getting started with Crypto Lending on Liberix becomes much more straightforward.
The Liberix Knowledge Hub is designed to empower users with clear, practical knowledge — supporting informed financial decisions and responsible use of digital assets.
