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.

$$H=\frac {\sum^{|C|}_{i=1}LtVi*V_{ci}} {\sum^{|L|}_{i=1}V_{li}}$$

Where:

• $H=$ the account's health factor
• $|C|=$ the number of collateralized assets held by the account
• $LtV_i=$ the loan-to-value ratio for collateral asset $i$
• $V_{ci}=$ the collateral value of collateral asset $i$
• $|L|=$ the number of outstanding loans held by the account
• $V_{li}=$ the liability value of loaned asset $i$

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).