HEALTH FACTOR
The Health Factor (HF) measures the safety of your borrow position. Keep it above 1.0 to avoid liquidation.
FORMULA
HF = Σ(collateral_value × liquidation_threshold) / total_debt
The numerator uses the liquidation threshold (more conservative than LTV). This means a position can still be healthy even if it's above the borrow LTV limit — it only becomes liquidatable when collateral × liquidation_threshold falls below debt.
THRESHOLDS
| Health Factor | Status | Meaning |
|---|---|---|
| ∞ | 🟢 Safe | No active debt |
| > 2.0 | 🟢 Safe | Well collateralized |
| 1.0 – 2.0 | 🟡 At Risk | Monitor regularly |
| < 1.0 | 🔴 Liquidatable | Can be liquidated by anyone |
EXAMPLE
Supply: 0.1 xclrBTC at $60,000 = $6,000 collateral
Liquidation threshold for xclrBTC: 75%
Weighted collateral: $6,000 × 75% = $4,500
Borrow: $3,000 xUSDC
HF = $4,500 / $3,000 = 1.5 ✓ Safe
After BTC price drops to $40,000
New collateral: 0.1 × $40,000 × 75% = $3,000
Debt: $3,000 xUSDC
HF = $3,000 / $3,000 = 1.0 → LIQUIDATABLE
⚠ Health Factor changes constantly — your collateral price fluctuates and your debt grows with accrued interest. Check your position regularly, especially when borrowing close to your LTV limit.
How to improve your HF
1. Repay debt — reduces the denominator
2. Supply more collateral — increases the numerator
3. Withdraw less — keep collateral in the pool
2. Supply more collateral — increases the numerator
3. Withdraw less — keep collateral in the pool