Health Factor & Liquidation

Overview

The Health Factor is a critical indicator that measures the safety and stability of your lending position. It provides real-time insight into how close your position is to liquidation risk.

What is Health Factor?

Health Factor is calculated based on your position's LLTV (Liquidation Loan-To-Value) ratio and represents the current health of your borrowing position relative to your collateral value.

Understanding LLTV (Liquidation Loan-To-Value)

LLTV represents the maximum borrowing percentage allowed before your position becomes at risk of liquidation.

Example:

• LLTV of 80% means:

  • For collateral worth $100

  • Maximum borrowable amount is $80

  • If you borrow more than $80 (e.g., $80.0001), your position becomes liquidatable

Key Points

• Higher Health Factor = Safer position

• Lower Health Factor = Higher liquidation risk

• Monitor your Health Factor regularly to maintain a safe borrowing position

• Consider adding more collateral or repaying debt if your Health Factor approaches dangerous levels

Additional Resources

For more detailed information about market concepts and mechanics, visit the official documentation:Morpho Protocol Documentation - Market ConceptsMorpho Protocol Documentation - Health Factor & Liquidation

Risk Management

⚠️ Important: Always maintain a comfortable buffer above the liquidation threshold to account for market volatility and price fluctuations.