The value of cryptocurrencies fluctuates, and if it tends to drop significantly, the borrower has the option to increase the value of the collateral to compensate for the drop. Should the value of the cryptocurrency decline to the point where the LTV reaches 90%, the exchange will notify the borrower that it has initiated the forced sale process and assigns the collateral to the provider, which is ACEMA Credit Czech. The latter then converts the cryptocurrency into euros and the investment is terminated early, with investors receiving 100% of their investment back including interest for the entire investment period.

No, it isn’t. With a higher LTV (combined with market volatility) there is a higher likelihood that a forced sale might be initiated. As a result, the investment might be terminated early, but the collateral ratio is not affected and investors always get their invested money back including interest for the entire period of the investment.

LTV (Loan To Value) is the percentage share of the value of the loan to the value of its collateral (real estate, cryptocurrency, etc.). The lower the LTV, the higher the collateral ratio.

Investments in cryptocurrency-backed loans are very well-secured. Partly because of the buyback feature (buyback guaranteed by the provider, ACEMA), but investors are also protected in the event of early termination of the investment and receive 100% of the funds invested plus interest for the entire period.

Those interested in financing arrange a loan with the provider ACEMA Credit Czech and guarantee it with their Bitcoin. The provider then offers the loan for investment on the BONDSTER platform. Investors get a share of the borrower’s principal and interest payments. The cryptocurrency is held on the so-called smart contract for the entire period of the loan. If the loan is properly repaid, the Bitcoin is automatically returned to the borrower. In the event of non-payment of the loan or lack of collateral due to a significant drop in the price of Bitcoin, the cryptocurrency is forfeited to the provider.

Investing in loans secured by cryptocurrency offers a high level of security and above-standard returns exceeding 10% p.a. Each loan is always secured by Bitcoin in the amount exceeding the value of the loan. The cryptocurrency is stored out of the borrower’s reach on a smart contract. It is an algorithm that monitors whether the Bitcoin collateral is sufficient at any given moment and automatically releases the collateral to the borrower the moment the debt is repaid, including interest, or, in the event of default on the loan, lets the Bitcoin be forfeited to the provider. In the event of early termination of the investment, investors get back 100% of the funds invested plus interest for the entire period.

No deeper understanding is required. The method of investing is the same as with other types of investments on BONDSTER. You can read more about investing in Bitcoin-secured loans here.

As for the investment principle itself, it is the same as with other investments on the BONDSTER platform. After logging into your investor account, you choose one of the loans secured by cryptocurrency, choose the amount to be invested and you can look forward to the appreciation of your money.