> For the complete documentation index, see [llms.txt](https://docs.pokefi.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pokefi.xyz/core-concepts/valuation-and-ltv.md). # Valuation and LTV Illiquid collateral is the central risk in lending against collectibles. Thin trading makes real-time valuation hard and, for generic assets, easy to manipulate. PokeFi's advantage is that graded Pokémon cards are far more appraisable than generic NFTs, because grading standardizes them and population reports quantify their scarcity. Even so, PokeFi treats valuation conservatively. This page explains the PokeFi Reference Price, how loan-to-value caps are set, and how default and liquidation protect the lender. *** ## The PokeFi Reference Price Every vaulted card carries a published valuation called the **Reference Price**, denominated in USDC. It is a blended figure, not a single quoted sale, and it is derived from transparent inputs so both sides can see how it was reached. **Inputs to the Reference Price:** * **Recent sold comps** for the exact card at the exact grade, drawn from auction houses, marketplaces, and price-tracking sources. * **Population data** from the grader's report. Scarcity at grade is a first-class value driver: a card with a low population at PSA 10 is worth more than a common one. * **Grade, set, edition, and chase-card status.** A 1st Edition Shadowless card is not the same asset as a modern reprint of the same character. * **Time-decayed averaging** that weights recent sales more heavily while resisting single-sale spikes and wash trades. Each valuation is stored with the comps and population count it was built from, and it is signed by the valuation authority. The card's current Reference Price is always the most recent published valuation. {% hint style="info" %} The Reference Price and its inputs are public. A lender should read the comps behind a valuation before funding a loan, and a borrower can see exactly why their card was valued where it was. {% endhint %} *** ## Loan-to-Value **Loan-to-value (LTV)** expresses the loan principal as a percentage of the card's Reference Price. It is the single most important risk number on the platform. ``` LTV = principal ÷ reference price ``` A loan of 40,000 USDC against a card valued at 100,000 USDC is at 40% LTV. The remaining 60% is the buffer that protects the lender against valuation error and market drawdown. ### LTV caps LTV is capped, and the cap is tiered by collateral liquidity: * **Blue-chip, high-population, actively-traded cards** support higher LTV, because they are easy to value and easy to sell. * **Thin, ultra-high-value grails** get lower LTV precisely because they are harder to liquidate, even though they are worth more. During beta, PokeFi starts conservative, in the range of roughly **30% to 50% LTV**, and widens the caps only as loss data accrues. Lower LTV is the primary defense against valuation error, so the platform errs toward caution while it builds its history. The borrower chooses the principal within the allowed range. A borrower who wants a larger safety margin, and a stronger incentive to repay, can request a lower LTV than the cap allows. *** ## Interest and Total Repayment Interest is fixed at origination. When a loan is funded, the total repayment is computed once and stored: ``` interest = principal × APR × (term in days ÷ 365) total repayment = principal + interest ``` Because this is a term loan, the figure does not change over the life of the loan. The borrower always knows exactly what they owe, and the lender always knows exactly what they will earn. Repaying early does not reduce the interest owed. *** ## No Margin Calls PokeFi does not liquidate a loan mid-term because a card's market price moved. There are no margin calls. This is a deliberate choice for illiquid collateral: forced auto-liquidations on a thin market would be both unfair to borrowers and unreliable, since the collateral cannot be sold instantly at a fair price. The lender's protection is therefore not a liquidation trigger. It is: 1. The **LTV buffer** set conservatively at origination, and 2. The **physical, recoverable, insured card** behind the token. *** ## Default and Liquidation On default (maturity passing without full repayment), the lender takes the collateral. Two paths are available: * **Hold and redeem.** The lender becomes the card's owner of record, redeems the physical card from the vault, and keeps or sells it independently. * **Liquidation channel.** The vaulted card is sold through PokeFi's managed liquidation channel (auction house or marketplace) and the proceeds settle the loan in USDC. Because the collateral is a real, insured, resaleable object rather than a purely on-chain asset, recovery is materially more robust than typical NFT lending. The conservative LTV means a defaulted card should be worth meaningfully more than the loan it backed, so the lender's downside is buffered even if the sale is imperfect. *** ## Guarding Against Manipulation Valuation manipulation, especially wash trading to inflate a card's apparent value, is a known risk. PokeFi mitigates it with: * **Time-decayed blended pricing** that no single sale can move sharply. * **Population cross-checks**, since a claimed value inconsistent with scarcity at grade is a red flag. * **Published methodology**, so any interested party can scrutinize a valuation and its comps. Over time, this transparent appraisal can harden into an on-chain price feed for the curated pool. During the peer-to-peer beta, PokeFi publishes the appraisal and lets each lender price the risk themselves. *** ## Related * [How a Loan Works](/core-concepts/loan-lifecycle.md): where valuation and LTV enter the loan lifecycle * [Custody and Title Tokens](/core-concepts/custody-and-vaulting.md): why the collateral behind the number is real and recoverable * [For Lenders](/getting-started/for-lenders.md): how to use LTV and the Reference Price when funding a loan --- # Agent Instructions This documentation is published with GitBook. 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