# 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 Concepts](https://docs.morpho.org/overview/concepts/market/) [Morpho Protocol Documentation - Health Factor & Liquidation](https://docs.morpho.org/overview/concepts/liquidation/)

## Risk Management

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