#Canada #Bitcoin #Toronto #Liquidation #APX Lending

Introduction

In an ever-evolving digital finance landscape, APX Lending, Canada's pioneering regulated digital-asset credit infrastructure company, has recently introduced an innovative model to enhance borrower protection while navigating the volatile cryptocurrency market. The 90/85 Standard aims to minimize the risk of foreclosure on borrowers' collateral during periods of market fluctuation.

Understanding the 90/85 Standard

At its core, the 90/85 Standard is designed to alleviate the common concerns faced by borrowers who leverage their Bitcoin as collateral. In a standard crypto-backed lending scenario, if the market value of Bitcoin dips significantly, borrowers face the risk of losing their collateral due to liquidation events. What distinguishes APX's approach is its commitment to protecting borrowers and preserving their investments, encouraging the reinvestment of Bitcoin as opposed to its liquidation.

Under the new model, specific thresholds govern how and when liquidations occur:

• - 80% Loan to Value (LTV): APX sends notifications to borrowers every six hours when the collateral's value approaches this threshold, allowing them to stay informed without issuing margin calls.
• - 90% LTV: Upon reaching this threshold, the initiation of partial liquidation begins, but only to address the immediate risk.
• - 85% LTV Reset: At this point, APX will liquidate just enough collateral to restore the loan to an 85% LTV, safeguarding more of the borrower’s assets compared to other models.
• - 0% Liquidation Fee: One of the standout features of APX's standard is the complete absence of liquidation fees, allowing borrowers to retain their collateral without incurring additional costs.

The Implications for Borrowers

Consider a scenario where a borrower has $100,000 in collateral and has taken out a loan for $90,000. Under typical liquidation conditions, this could lead to the sale of significant portions of their Bitcoin

• - If full liquidation occurs without a fee, it could sell off $90,000 worth of collateral, leaving the borrower with just $10,000.
• - Alternatively, with a common 5% liquidation fee, the potential sale could rise to $94,737, leaving a scant $5,263.

However, with APX's 90/85 Standard, only $33,333 would be liquidated, keeping the borrower with a solid $66,667 in collateral and reducing the loan balance to $56,667.

This preservation of assets signifies a monumental shift in how lending against cryptocurrency works, assuring borrowers that they can maintain a large portion of their investments, even in the face of market volatility.

A Commitment to Borrowers

Andrei Poliakov, the Founder and CEO of APX Lending, expressed the guiding principle behind the 90/85 Standard: "Borrowers choose to borrow against Bitcoin precisely because they don't want to sell it. We believe in Bitcoin, and we want our borrowers to keep as much of it as possible. A momentary market move shouldn't unnecessarily liquidate a position someone may have spent years accumulating."

With the introduction of the 90/85 Standard, APX Lending underscores its commitment to developing a lending model that prioritizes borrower needs while maintaining the integrity of their investments. By selling only what is absolutely necessary when liquidating collateral, APX not only provides financial flexibility to its borrowers but also fosters a more robust lending environment.

Conclusion

The launch of the 90/85 Standard marks a significant advancement in the lending landscape for Bitcoin-backed loans. Borrowers are now equipped with a model that not only reduces the likelihood of losing significant portions of their collateral but also operates transparently and efficiently. As APX Lending moves forward, it paves the way for a new era in digital asset lending, providing peace of mind to those who are investing in and securing their future with cryptocurrencies.