Health Factor = Collateral Value (LTV-adjusted) / Debt
- HF ≥ 1.0 → Safe
- HF < 1.0 → Liquidatable
If your health factor drops below 1.0, anyone can liquidate your position.
What moves HF down
| Cause | Effect |
|---|
| Position price drops | Collateral value ↓ |
| Interest accrues | Debt ↑ |
| You withdraw collateral | Collateral value ↓ |
| Market approaches resolution | Early-closure factor reduces effective LTV |
| Oracle becomes unavailable | That collateral = $0 for borrowing |
What moves HF up
| Action | Effect |
|---|
| Repay debt | Debt ↓ |
| Add collateral | Collateral value ↑ |
| Position price rises | Collateral value ↑ |
HF zones
| HF | Status | Action |
|---|
| > 1.5 | Safe | Monitor normally |
| 1.2–1.5 | Caution | Watch market moves |
| 1.0–1.2 | Warning | Consider repaying or adding collateral |
| < 1.0 | Liquidatable | Liquidation can happen |
Keep HF above 1.2 to have margin for price swings and interest accrual.
Example
You have 600portfolioat65300 debt:
Collateral value = $600 × 0.65 = $390
HF = $390 / $300 = 1.30 ✓
Collateral value = $480 × 0.65 = $312
HF = $312 / $300 = 1.04 ⚠️
