Health Factor
How position safety is measured and liquidation thresholds work
Formula
health_factor = (Σ collateral_value_usd × liquidation_threshold) / total_debt_value_usdInterpretation
Health Factor | Status | Action |
|---|---|---|
≥ 1.0 | Safe | Position is healthy |
< 1.0 | Liquidatable | Can be liquidated |
No debt | Infinite | No risk |
In the UI, health factor is displayed as a percentage where 100% = no debt, closer to 0% = higher liquidation risk, and 0% indicates liquidation.
Current Pool Parameters
Each pool has its own Max LTV, liquidation threshold, and liquidation bonus. Max LTV is the highest LTV allowed when opening or increasing a position. The liquidation threshold is the LTV where the position becomes liquidatable.
Asset | Max LTV* | Liquidation threshold* | Liquidation bonus* |
|---|---|---|---|
BTC | 65% | 74% | 5% |
ETH | 65% | 74% | 5% |
USDC | 65% | 74% | 5% |
USDT | 65% | 74% | 5% |
ICP | 50% | 70% | 7.5% |
*These values are current examples. Always check the live Insights page before opening or adjusting a position, because pool parameters can change.
The table above is informational. The app's live Insights page is the source of truth at transaction time.
Weighted Average Threshold
When a user has collateral across multiple pools, the weighted average liquidation threshold determines overall borrowing capacity:
weighted_threshold = Σ (position_collateral_usd × pool_threshold) / total_collateral_usdExample
User has:
- $10,000 in BTC (LT = 74%)
- $5,000 in ICP (LT = 70%)
Total collateral: $15,000
Weighted threshold:
(10000 × 0.74 + 5000 × 0.70) / 15000 = 0.7267 (72.67%)Health Factor Calculation
Using the weighted threshold:
health_factor = (total_collateral × weighted_threshold) / total_debtExample
User has:
- $15,000 collateral (weighted threshold = 72.67%)
- $6,000 debt
Health factor:
(15000 × 0.7267) / 6000 = 1.82
Status: Safe (HF > 1.0)Health Factor Calculation
Using the weighted threshold:
health_factor = (total_collateral × weighted_threshold) / total_debtExample
User has:
- $15,000 collateral (weighted threshold = 81.67%)
- $6,000 debt
Health factor:
(15000 × 0.8167) / 6000 = 2.04
Status: Safe (HF > 1.0)Health Factor vs Health Factor Percentage
The protocol uses two representations of position safety:
- Health Factor (HF): Traditional decimal format (e.g., 2.04, 1.33, 0.96). Values above 1.0 are safe, below 1.0 are liquidatable.
- Health Factor Percentage (HF%): Percentage format displayed in the UI (e.g., 51%, 80%, 0%). 100% = no debt, 0% = liquidatable.
Users can toggle between these formats in General Settings based on their preference.
Quick conversion table
Liquidium can show position safety as decimal Health Factor, Health %, or LTV. The app defaults to Health %, while technical examples may use decimal Health Factor.
Decimal Health Factor | App Health % | Example LTV at 74% liquidation threshold | Meaning |
|---|---|---|---|
No debt | 100% | 0.0% | No active borrow |
5.0 | 80.0% | 14.8% | Very large buffer |
3.0 | 66.7% | 24.7% | Large buffer |
2.0 | 50.0% | 37.0% | Healthy buffer |
1.5 | 33.3% | 49.3% | Moderate buffer |
1.2 | 16.7% | 61.7% | Low buffer |
1.0 | 0.0% | 74.0% | Liquidation threshold |
Formula:
Health % = max(0, (Health Factor - 1) / Health Factor * 100)LTV = liquidation threshold * (1 - Health % / 100)
The LTV column uses a 74% liquidation threshold as an example. Always check the Insights page for current asset-specific Max LTV and liquidation threshold values before borrowing.
Health Factor States
State Descriptions
State | Health Factor | What Happens |
|---|---|---|
Healthy | > 1.2 | Normal operation |
Warning | 1.0 - 1.2 | Warning zone, consider adding collateral |
Liquidatable | < 1.0 | External liquidators can act |
Partial Liquidation | 0.95 - 1.0 | Up to 50% of debt can be repaid |
Full Liquidation | < 0.95 | Up to 100% of debt can be repaid |
What Affects Health Factor
Decreases Health Factor (More Risk)
- Borrowing more assets
- Withdrawing collateral
- Collateral price dropping
- Debt accruing interest
- Collateral asset price falling relative to debt asset
Increases Health Factor (Less Risk)
- Repaying debt
- Adding more collateral
- Collateral price increasing
- Debt asset price falling relative to collateral
Practical Example
Starting position:
Collateral: 1 BTC @ $50,000 = $50,000 (LT = 74%)
Debt: $27,000 USDC
Health Factor: (50000 × 0.74) / 27000 = 1.37 ✓ SafeAfter BTC drops 20%:
Collateral: 1 BTC @ $40,000 = $40,000
Debt: $27,000 USDC
Health Factor: (40000 × 0.74) / 27000 = 1.10 ⚠️ At RiskAfter BTC drops another 10%:
Collateral: 1 BTC @ $36,000 = $36,000
Debt: $27,000 USDC
Health Factor: (36000 × 0.74) / 27000 = 0.99 🔴 LiquidatableMonitor your health factor regularly, especially during volatile market conditions. Maintaining a higher health factor provides a larger safety buffer against liquidation.
Price Oracle Integration
Health factor calculations rely on accurate price data from the price oracle:
- Prices are fetched from multiple sources
- 60-second cache to prevent manipulation
- Deviation alerts for unusual price movements
The protocol uses USD-denominated prices to calculate collateral and debt values across different assets.