#⃣LTV is the most important number in RWA. Most people ignore it. Loan-to-value ratio. Simple math: loan amount divided by property value. A $600,000 loan on a $1,000,000 house is 60% LTV. The borrower has $400,000 of their own money in the deal. If the market drops 30%, the house is worth $700,000. The loan is still $600,000. The collateral covers the loan. An 80% LTV on the same house is $800,000 borrowed. A 30% market drop puts the house at $700,000. The loan now exceeds the collateral. That is where losses start. A 90% LTV? The borrower barely has skin in the game. A 15% dip and the loan is underwater. Check the LTV before you check the percentage. #RWA #Education #LTV
CoinLander | RWAShare
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