Health Factors
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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:
Where:
Liquidation factors are assigned to supported assets by the protocol, and they govern the point at which an account's positions can be liquidated.
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 collateral.
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
A user can increase their health factor by depositing more or decreasing their liability value (e.g. repaying their loans).