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.
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.
LLTV represents the maximum borrowing percentage allowed before your position becomes at risk of liquidation.
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
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
For more detailed information about market concepts and mechanics, visit the official documentation: Morpho Protocol Documentation - Market Concepts Morpho Protocol Documentation - Health Factor & Liquidation
⚠️ Important: Always maintain a comfortable buffer above the liquidation threshold to account for market volatility and price fluctuations.
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