Health Factor
Determining a loans state through Health Factor on 0VIX
Last updated
Determining a loans state through Health Factor on 0VIX
Last updated
The Health Factor is a numeric representation of the degree of safety of user assets deposited as collateral. A higher value indicates that the user's funds have greater safety from liquidation.
If the Health Factor drops below 1, a portion of the user's collateral can be liquidated. The Health Factor of a user's funds is in a dynamic state and depends on the liquidation threshold of the collateralized position against the value of the loan.
The Health Factor represents how “safe” a loan is, defined as the proportion of total supplied collateral against the total value of the loan. It increases or decreases based on the value fluctuation of the user's supplied asset value against the user's borrowed value.
A Higher Health value improves the user's collateral safety and borrow position.
A Lower Health value worsens the user's collateral safety and borrow position.
Having the Health Factor below 1 results in the potential liquidation of a portion of the user's collateral.
Borrow Limit represents the percentage of the maximum amount a user can borrow, based on the value they have deposited as collateral and the available liquidity.
To improve the Health Factor, users can:
Repay a portion or the full amount of the borrowed amount
Add more collateral under "Supply"
