Borrowing limit refers to the maximum amount of funds that a user can borrow when using a lending platform or service within the cryptocurrency sector. This limit is often determined by factors like the value of the assets a user holds, the platform’s lending policies, and the user’s creditworthiness or reputation within the system.Typically, borrowing limits are set based on the collateral provided. For instance, if a user deposits a certain amount of cryptocurrency as collateral, the platform may allow them to borrow a percentage of that value. This ratio can vary, affecting how much can be borrowed against different assets.Maintaining a healthy borrowing limit is crucial as it helps users avoid liquidation. If the value of the collateral drops significantly, it may fall below the required threshold, prompting the platform to sell off the collateral to cover the loan. Understanding one’s borrowing limit can assist users in effectively managing their investments and minimizing risks.