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=∑i=1∣C∣LtVi∗Vci∑i=1∣L∣VliH=\frac {\sum^{|C|}_{i=1}LtVi*V_{ci}} {\sum^{|L|}_{i=1}V_{li}}
Where:
  • ​
    H=H=
    the account's health factor
  • ​
    ∣C∣=|C|=
    the number of collateralized assets held by the account
  • ​
    LtVi=LtV_i=
    the loan-to-value ratio for collateral asset
    ii
    ​
  • ​
    Vci=V_{ci}=
    the collateral value of collateral asset
    ii
    ​
  • ​
    ∣L∣=|L|=
    the number of outstanding loans held by the account
  • ​
    Vli=V_{li}=
    the liability value of loaned asset
    ii
    ​
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).