How Lantern Calculates Your Loan-to-Value (LTV) Ratio

We're excited to share an important update about how we calculate your Loan-to-Value (LTV) ratio.

This change gives you a more accurate picture of your loan position and helps us also manage risk more effectively.

How We Calculate Loan-to-Value (LTV) Now

We've upgraded our LTV calculation to include accrued interest in your outstanding balance. This might sound technical, but it's actually quite simple:

• (Loan Balance Outstanding + Accrued Interest) ÷ Collateral Value

Accrued interest is debt you've accumulated but haven't paid yet. Your true LTV should reflect your complete debt position, not just your outstanding principal balance.

For example, let’s say you taken out a loan of $20,000 using $40,000 collateral of BTC. Your initial LTV is 50%. During the month, you accrue $200 of interest on your loan. Assuming the price of BTC stays the same, your LTV has slightly increased to 50.5% over the course of the month to account for the unpaid interest.

How to Monitor Your LTV

In your Lantern dashboard, you can:

1. View your current LTV (updated in real-time with accrued interest)

2. See your distance from margin call (65% LTV threshold)

3. Track your liquidation buffer (75% LTV threshold)

4. Monitor accrued interest before it's due

Set Up Auto-Pay To Avoid Late Payment Fees

The easiest way to keep your LTV stable is to enable automatic interest payments. This prevents interest accrual from affecting your LTV ratio drastically if prices drop. It also prevents late fees from adding up.

Why We Made This Change

At Lantern, we're committed to two things:

1. Protecting your collateral through conservative risk management

2. Giving you complete transparency about your loan position

Including accrued interest in LTV calculations serves both goals. It gives you a more accurate picture of your debt and helps us identify risk earlier which gives you more time to respond.

Important Reminders

Your margin call and liquidation thresholds haven't changed:

• Margin call: 65% LTV (you get 72 hours to respond)

• Liquidation threshold: 75% LTV

• No liquidation fees: We never profit from liquidations

This change applies to all loans:

Whether you borrowed against Bitcoin, Ethereum, XRP, Solana, or any other supported asset, your LTV now includes accrued interest.