I. Introduction
Q: What is RedotPay Collateralized Loan?
A: A collateralized loan from RedotPay lets you borrow stablecoins without selling your cryptocurrency. You pledge your crypto as collateral and pay interest. This service helps you manage short-term liquidity needs.
Q: What are the benefits?
A: You can access funds using your crypto as collateral, without selling your holdings. Interest is charged only on the amount you borrow. You may repay your loan at any time; there’s no fixed repayment date.
Q: What is collateral? What does over-collateralization mean?
A: Collateral is the crypto a borrower pledges as security to borrow stablecoins. Over-collateralization means the value of the pledged crypto is greater than the loan amount.
Q: Which cryptocurrencies can I pledge and borrow?
A: Currently, you can pledge BTC or ETH and borrow USDT or USDC.
II. Loan Process
Q: How do I apply for a loan?
A: Tap the [Start Borrowing] button on the homepage and follow the on-screen steps.
Q: What is the interest rate and how is it calculated?
A: The interest rate for each loan is set according to the rate shown on the app at the time of borrowing. Interest is calculated as simple interest, meaning it is charged only on the principal amount borrowed and does not compound.
Interest accrues daily from the day your loan is issued.
Q: How can I repay?
A: Go to [Manage Loans] on the homepage. You can make full or partial repayments, which are deducted from your account balance. If you make a partial repayment, it goes toward unpaid interest first, then the principal.
Q: How can I add or withdraw collateral?
A: On the [Manage Loans] page, you’ll find options to adjust your LTV ratio. You can add more collateral if your risk level increases, or withdraw some when your risk goes down. When making a partial repayment, you can also choose to release any extra collateral from your loan.
Q: How can I view my loan orders?
A: All active loans are shown on the [Manage Loans] page. Completed or liquidated orders are moved to the [Completed Orders] page.
III. Risk Management
Q: What is the Loan-to-Value (LTV) ratio?
A: The Loan-to-Value (LTV) ratio measures your loan's risk. There are three key LTV levels:
Initial LTV: Sets the maximum amount you can borrow when you create your loan.
Margin Call LTV: If your LTV goes above the Margin Call threshold, you’ll receive notifications by email and app alerts, asking you to add collateral or repay part of your loan to lower your LTV.
Liquidation LTV: If your LTV goes above the Liquidation threshold, your collateral will be automatically sold to repay your loan and any applicable fees.
Q: How is LTV calculated?
A: LTV = Total Outstanding / Collateral Value
Total Outstanding = Σ (Outstanding Principal + Outstanding Interest)
Q: What is liquidation? What happens if my position is liquidated?
A: Liquidation happens if you default or your LTV goes above the liquidation threshold. At that point, you can’t adjust your collateral or repay the loan. The platform will sell your collateral to cover the outstanding amount and apply a 2% penalty on the sale. Any leftover funds after repayment and penalties will be automatically returned to your funding account.
Warning: You have to repay your loans. Don't pay any intermediaries.
Money Lender's Licence No: [1550/2024]
Hotline: (852) 2765 4472