Determining a loans state through Health Factor on 0VIX
Health Factor on 0VIX
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.
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.
Borrow Limit on 0VIX
To improve the Health Factor, users can:
- Repay a portion or the full amount of the borrowed amount
- Add more collateral under "Supply"