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Cashaa’s credit line system dynamically adjusts based on the savings account balance, withdrawals, and repayments. The key components are:

1.1 Total Credit Line

🔹 Definition:

• The maximum borrowing limit a user can access based on their savings account or wallet balance.

• This credit line is pre-approved, meaning no collateral is locked until funds are withdrawn.

🔹 How It Is Calculated:

Total Credit Line = Eligible Savings Account Balance × Maximum LTV

🔹 Example:

• A user has $10,000 worth of crypto in their savings account.

• If their maximum LTV is 55%, then:

Total Credit Line = 10,000 × 0.55 = 5,500

• The user can borrow up to $5,500, but collateral is not locked at this stage.

1.2 Used Credit Line

🔹 Definition:

• The amount that has already been withdrawn from the Total Credit Line and is now an active loan.

• When a user withdraws a loan, a higher-value amount of collateral is locked to secure the loan.

🔹 How It Is Calculated:

Used Credit Line = Total Loan Principal Borrowed

🔹 Example:

• A user with a Total Credit Line of $5,500 withdraws $3,000 as a loan.

• As soon as this loan is drawn, a larger amount of collateral, based on the applicable LTV, is locked.

Used Credit Line = 3,000

• The remaining credit that can still be borrowed is $2,500.

1.3 Available Credit Line

🔹 Definition:

• The remaining borrowing capacity that a user can still utilize from their Total Credit Line.

• This is the difference between the Total Credit Line and Used Credit Line.

🔹 How It Is Calculated:

Available Credit Line=Total Credit Line−Used Credit Line

🔹 Example:

• A user has a Total Credit Line of $5,500 and has already withdrawn $3,000 as a loan.

Available Credit Line = 5,500 − 3,000 = 2,500

• The user can still withdraw up to $2,500, and no additional collateral is locked until further funds are borrowed.

🔹 Collateral is NOT locked when a credit line is assigned – It remains in the savings account and can be used freely.

🔹 Collateral is only locked when the user withdraws funds from the credit line – Securing the loan amount drawn.

🔹 If a user repays the principal (fully or partially), a proportionally higher amount of collateral is unlocked.

🔹 Example of Collateral Locking & Unlocking:

• A user has $10,000 BTC in their savings account and a Total Credit Line of $5,500.

• They withdraw $2,000, so collateral worth more than $2,000 (based on LTV) is locked.

• Later, they repay $1,000 of the loan principal—a proportionally greater amount of collateral is unlocked.

Several factors impact credit line values dynamically:

3.1 Changes in Savings Account Balance

✔ If a user adds more funds to their savings account, their Total Credit Line increases.

✔ If funds are withdrawn from the savings account, the Total Credit Line decreases accordingly.

🔹 Example:

• A user with $10,000 BTC in their savings account receives additional BTC, increasing the balance to $12,000.

• If the LTV remains 55%, the Total Credit Line increases from $5,500 to $6,600.

3.2 Loan Withdrawals and Repayments

✔ When a user withdraws funds from their credit line, the Used Credit Line increases and collateral is locked.