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 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 | Suggested buffer zone, consider adding collateral |
Liquidatable | < 1.0 | External liquidators can act |
Partial Liquidation | 0.975 - 1.0 | Up to 50% of the debt in one asset can be repaid |
Full Liquidation | ≤ 0.975 | Up to 100% of the debt in one asset 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 use prices from the Internet Computer's Exchange Rate Canister (XRC). The Lending Canister refreshes each asset's price every 30 seconds. If a needed price is older than 120 seconds, borrows, withdrawals, and liquidations are rejected until a fresh price arrives.
The protocol uses dollar-denominated prices to compare collateral and debt across different assets.