What is LVR?

LVR stands for Loan-to-Value Ratio. It measures the total debt you owe against the current value of your collateral, expressed as a percentage.

The Formula

LVR = (Total Credit + Accrued Interest + Accrued Fees) ÷ AUD Value of Security Assets × 100

Example: $25,000 loan + $650 interest + $0 fees = $25,650 total debt. Collateral worth $50,000. LVR = ($25,650 ÷ $50,000) × 100 = 51.3%

LVR Thresholds

Vield uses specific LVR thresholds to manage loan risk:

50% LVR - Maximum Initial LVR

  • This is the maximum LVR at which loans are issued
  • You can borrow up to 50% of your collateral's AUD value
  • Example: $50,000 collateral → maximum $25,000 loan

65% LVR - First Warning

  • Vield sends a warning notification (via app, email, and/or phone)
  • No immediate action required, but you should monitor your LVR closely
  • Consider adding collateral or paying down debt

70% LVR - Second Warning

  • Vield sends another warning notification
  • Still no action required, but risk is increasing
  • Strongly recommended to add collateral or pay down debt

75% LVR - Repayment Notice

  • ACTION REQUIRED: Vield issues a repayment notice
  • You must bring your LVR back to 65% or lower
  • Timeframe: 1 day
  • Options: Pay down loan balance OR deposit additional collateral
  • Consequence of inaction: Default notice may be issued

85% LVR - Default Notice

  • CRITICAL: Vield issues a Default Notice
  • Timeframe: 30 days to repay the entire outstanding loan amount
  • Vield may also suspend further loans and apply account restrictions
  • If repaid in full: Collateral returned to your wallet, loan terminated
  • If not repaid: Vield may retain collateral to cover outstanding debt
  • Auto-sell option: You may consent to Vield selling crypto automatically to prevent default

How LVR Changes Over Time

Interest and Fees Increase LVR

As interest accrues daily (13% APR compounded daily), your total debt increases, raising your LVR even if collateral value remains stable.

Example: $20,000 loan with $50,000 collateral starts at 40% LVR. After 3 months, $650 interest accrues → $20,650 debt → 41.3% LVR (no collateral value change).

Market Volatility Affects LVR

Crypto price increase → LVR decreases:

$25,000 loan secured by 1 BTC at $50,000 = 50% LVR. If BTC rises to $70,000, LVR drops to 35.7%.

Crypto price decrease → LVR increases:

$25,000 loan secured by 1 BTC at $50,000 = 50% LVR. If BTC drops to $35,000, LVR rises to 71.4%.

Managing Your LVR

Lowering Your LVR

Option 1: Pay Down a Portion of the Loan Balance

  • Reduce the numerator in the LVR formula
  • Make early repayments via PayID/bank transfer or selling collateral

Option 2: Add More Collateral

  • Increase the denominator in the LVR formula
  • Transfer additional BTC or ETH to your Security Wallet
  • Effective immediately upon blockchain confirmation

Monitoring Your LVR

Check your LVR regularly in the Vield app or web portal. Your dashboard displays:

  • Current LVR percentage
  • Total outstanding balance
  • Current collateral value (live AUD rates)
  • LVR trend over time

LVR Scenarios

Scenario 1: Stable Market

You take a $20,000 loan against 1 BTC worth $50,000 (40% LVR). After 3 months, $650 interest accrues. BTC price remains $50,000. New LVR = ($20,650 ÷ $50,000) × 100 = 41.3%.

Action: No immediate action needed, but LVR will continue rising with interest.

Scenario 2: Price Drop

You take a $25,000 loan against 1 BTC worth $50,000 (50% LVR). BTC drops to $35,000 after 2 months, and $433 interest has accrued. New LVR = ($25,433 ÷ $35,000) × 100 = 72.7%.

Action: You receive a 70% warning. Within 1 day of hitting 75%, you must either: (a) deposit 0.3 BTC ($10,500) to bring LVR to 64.9%, or (b) pay $2,700 to bring LVR to 65%.

Scenario 3: Price Increase

You take a $25,000 loan against 1 BTC worth $50,000 (50% LVR). BTC rises to $120,000. Your LVR drops to 20.8%.

Action: Since your LVR is below 25%, you may request an additional loan (subject to approval) or request to withdraw a portion of your collateral such that the LVR does not exceed 50%. Maximum additional loan capacity: ($120,000 × 50%) - $25,000 = $35,000.

Notice Void Conditions

If you're issued a notice (repayment or default) and your LVR improves to 65% or lower before the deadline (due to crypto price increase), the notice becomes void and your loan returns to good standing. You'll be notified immediately.

Best Practices

  • Maintain a buffer: Aim for LVR below 50% to handle market volatility
  • Monitor during volatility: Check LVR daily when crypto markets are unstable
  • Act on warnings: Don't wait until 85% to respond
  • Plan ahead: Set aside funds to add collateral or make payments if needed
  • Consider auto-sell: Consent to automatic liquidation if you can't actively monitor markets