# LTV (Loan-to-Value)

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**Publisher:** Decentralized Finance Publication

## Definition

The ratio of the amount borrowed to the value of the collateral, expressed as a percentage. LTV = (borrow amount ÷ collateral value) × 100. A lower LTV means more overcollateralisation and lower liquidation risk. Most DeFi lending protocols set maximum LTV ratios by collateral type (e.g., ETH max LTV of 80% on Aave) and liquidate positions where LTV exceeds the liquidation threshold.

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Canonical: https://decentralized-finance.io/glossary/ltv-loan-to-value/