Overcollateralization

Overcollateralization just means you pledge more value than you borrow. Put up $1,000 of crypto, draw a $500 credit line against it, and you’re overcollateralized two-to-one — that extra $500 is a cushion, not free money you can spend.

Why it matters: crypto prices swing, so a card that lets you spend against your coins can’t lend you the full value of them — there has to be room for the collateral to fall before the debt is at risk. The bigger the buffer (the lower your loan-to-value), the more your position can survive a downturn before the issuer sells your collateral to cover the loan. Borrow close to the limit and a single bad week can trigger that sale.

For example: ether.fi Cash describes its Borrow Mode as overcollateralized borrowing against your vault — each asset has its own cap, so weETH lets you borrow only up to 55% of its value, keeping you well inside a 75% liquidation threshold. The Nexo Card lends up to roughly 50% LTV on BTC and ETH for the same reason. Both as of June 2026.