Risk Customization

RWAs and their issuers feature very different risk profiles than digital assets, as often the underlying asset is much more stable than their counterparts. As such, Mystic adjusts loan-to-Value (LTV) ratios per pool/asset in order to meet these different risk profiles. This customization enables us to feature very high LTVs, ranging from 80% to 99%. This in turn allows users to borrow more against their collateral compared to many other platforms, effectively maximizing their capital efficiency.

Benefits of High LTV

A high LTV ratio means that users can access more liquidity without needing to provide excessive collateral. This is particularly beneficial for those who want to leverage their investments or need quick access to capital for other opportunities. By offering competitive LTV ratios, Mystic Finance makes its platform more attractive to borrowers, increasing overall liquidity and RWA utility.

Risk Management

While high LTV ratios provide significant benefits, they also require robust risk management practices. Mystic Finance employs several mechanisms to mitigate the risks associated with high LTV borrowing, including real-time collateral monitoring and insurance funds to cover potential bad debt on the pools. See more about how we manage risk in Risk Management.