LTV & Thresholds
Two Key Numbers
Each position has two parameters: the LTV (loan-to-value) which determines max borrowing, and the liquidation threshold which determines when liquidation triggers. The threshold is always higher than LTV to create a safety buffer.
| Tier | LTV (max borrow) | Liq. Threshold | Buffer |
|---|---|---|---|
| Conservative | 80% | 85% | 5% |
| Moderate | 65% | 70% | 5% |
| Risk | 50% | 55% | 5% |
Example
Position: $10,000 in Conservative tier (80% LTV / 85% liq threshold)
Max borrow: $10,000 × 80% = $8,000
Liquidation starts: when debt > $10,000 × 85% = $8,500
The 5% buffer ($500) gives you time to react before liquidation.How Tiers Are Assigned
| Criteria | Conservative | Moderate | Risk |
|---|---|---|---|
| Orderbook depth | >$1M | $100K–$1M | <$100K |
| Market age | Established | Active | New/niche |
| Time to resolution | >30 days | 7–30 days | <7 days |
| Historical volatility | Low | Medium | High |
Cross-Margin Weighted LTV
Since Varla uses cross-margin, your effective LTV is a weighted average across all deposited positions.
Weighted LTV example
Portfolio:
├── $5,000 Conservative (80% LTV) → capacity: $4,000
├── $3,000 Moderate (65% LTV) → capacity: $1,950
└── $2,000 Risk (50% LTV) → capacity: $1,000
───────────────────────────────────────────────
Total collateral: $10,000
Total capacity: $6,950
Effective LTV: 69.5% ℹ Governance overrides
Governance can set per-position LTV overrides that only reduce the tier default — never increase it. This allows the protocol to respond to changing market conditions without upgrading contracts.