APX Lending has unveiled a new liquidation model that the Canadian fintech says is designed to preserve as much borrower collateral as possible while protecting the loan during market volatility.
Launched in 2023 at the Futurist Blockchain Conference, Toronto’s APX is Canada’s first regulated digital-asset credit infrastructure company.
The company was founded by the team behind Coinberry, a Canadian licensed crypto exchange acquired by Vancouver-based WonderFi.
Under many crypto-backed lending models, reaching a liquidation threshold can result in most or all of a borrower’s collateral being sold. For Bitcoin-backed borrowers, a major fear is losing the Bitcoin they chose to borrow against.
“Borrowers choose to borrow against Bitcoin precisely because they don’t want to sell it,” says chief executive officer Andrei Poliakov.
APX believes it has developed a solution.
The “90/85 Standard” from APX, which promises no liquidation fees, is designed to mitigate the risk of losing a majority of crypto collateral.
“We believe in Bitcoin, and we want our borrowers to keep as much of it as possible,” Poliakov says.
This means that a “momentary market move shouldn’t unnecessarily liquidate a position someone may have spent years accumulating,” the CEO says.
With its latest offering, APX begins warning borrowers at an 80% loan-to-value ratio. At 90%, a partial liquidation is triggered, but APX sells only enough collateral to return the loan to 85% LTV.
“Liquidation exists to protect the loan,” Poliakov posits. “It shouldn’t sell more Bitcoin than necessary, and it shouldn’t be a profit centre for lenders.”
Poliakov points the fictional example of a borrower with $100,000 of collateral and a $90,000 loan.
In this event, full liquidation with a fee would leave the borrower with barely $5,000 in collateral. Under APX’s 90/85 Standard, however, $33,333 of collateral would be sold and applied against the loan, leaving the borrower with $66,667 of collateral and a $56,667 loan balance.
“We built the 90/85 Standard around a simple principle: sell only what is necessary,” Poliakov stated. “APX earns nothing from liquidation events, and every satoshi that does not need to be sold stays with the borrower.”
The 90/85 Standard is live across eligible APX crypto-backed credit products.
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