What is Automatic Collateral Transfer?

This information comes directly from Nexo's help center


If your collateralized assets decrease in value and you do not add additional assets to your Nexo account after receiving warnings from the Nexo blockchain oracle, the Nexo Oracle may initiate partial automatic loan repayments to rebalance the Loan-to-Value back within limits.

To avoid this scenario, you can enable our Automatic Collateral Transfer feature. Here’s how it works: when you don’t cover the required LTV ratio, the Nexo Oracle will automatically transfer a small portion of your assets from the Savings Wallet to the Credit Line Wallet to fulfil the gap, thus keeping your loan health in check.

This option is ON by default and we strongly recommend that it is kept that way as it creates an extra buffer against automatic repayments. In case the crypto in your “Credit Line” wallet is no longer able to support your loan due to sudden loss of value, the system will transfer in extra crypto from your “Savings” wallet to improve your LTV ratio and keep it below the automatic repayments threshold.


If your collateral appreciates in value, your credit line limit also goes up. You’re free to withdraw more credit or leave your current loan as is.

You can also use the extra value of your crypto to pay off part of your credit. If your assets have met your price target, then you can:

  • Place an order in your Nexo Wallet to sell a fraction of the crypto assets in your account.
  • Repay part or all of your outstanding balance.

The transaction is performed without any additional fees on Nexo’s part. Any resulting charges are fees from the exchange that facilitated the trade.

Source: What is Automatic Collateral Transfer?
August 23, 2022
Was this article helpful?

Leave a Reply

Your email address will not be published. Required fields are marked *