Lendingblock will automatically top-up a loan’s collateral when the Loan-to-Value (LTV) if the Borrow loan exceeds the specified amount on the loan dashboard (i.e. the value of the collateral is approaching the same level as the value of the principal amount (borrowed stablecoin). The funds used to top up are taken from a user’s available platform balance.
If no funds are available, a margin call is issued to the borrower, instructing them to add additional collateral to the loan within a specified timeframe so that the LTV level will drop to the required safe amount.
If the borrower fails to add the required amount of additional collateral in time and the Borrow loan approaches the liquidation level, then Lendingblock will liquidate part of the collateral of the loan, charge a liquidation fee and return the remaining collateral back to the borrower’s account balance.