Health Factors
What's a health factor?
An account's health factor is a measure of the account's collateralization levels. It is based on the account's total liability value, collateral value, and collateral liquidation factors.
To originate a loan, a user must ensure their health factor will be above 1.10 after the loan has been originated. If a user account's health factor falls below 1.00, their positions can be liquidated until their health factor reaches 1.02. See a rough health factor scale below:
An accounts health factor is calculated with a user's liability value (outstanding loan value + accrued interest), collateral value, and the loan-to-value ratio of their collateralthis formula.
Where:
the account's health factor
the number of collateralized assets held by the account
the loan-to-value ratio for collateral asset
the collateral value of collateral asset
the number of outstanding loans held by the account
the liability value of loaned asset
Liquidation factors are assigned to supported assets by the protocol, and they govern the point at which an account's positions can be liquidated.
How can I increase my health factor?
A user can increase their health factor by depositing more collateral or decreasing their liability value (e.g. repaying their loans).
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