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Health factor measures whether a lending account meets its liquidation thresholds. An account with health factor below 1 can be liquidated. A higher value gives more room for adverse price changes or growing debt.

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How it is calculated

Each supplied asset has a liquidation threshold. The protocol multiplies each asset’s USD value by that threshold, adds the results, and divides by the total USD value of debt.
A 78% threshold counts USD 0.78 for each USD 1 of collateral. Collateral and debt prices both affect the result. A rounded display value of 1.00 can hide a contract value below 1. Missing prices or risk data mean the result is unknown; they do not mean the account is debt-free. Health factor does not measure every risk. Smart contract failures, bad debt, and unavailable liquidity can affect funds even when an account is above 1.

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Example

Suppose an account supplies USD 1,000 of collateral with a 78% liquidation threshold and borrows USD 500:
If the collateral price falls by half while the debt value stays unchanged:
The account is eligible for liquidation even though it did not borrow more. These examples keep interest and all other parameters unchanged. The contract rounds collateral used for risk checks down and debt up. Its calculated health factor also rounds down.

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What changes health factor

Health factor changes with collateral and debt prices, interest accrual, supplying, borrowing, repayment, and withdrawals. Stored liquidation terms also affect the calculation; parameter refreshes can change those terms. Adding collateral or repaying debt can increase health factor. Increasing debt or withdrawing collateral can reduce it. Keep a buffer above 1 and review it after significant price movements or account changes.

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Health factor and borrowing capacity

Health factor is separate from the LTV borrowing limit. An account can remain above 1 while lacking capacity to borrow more or withdraw collateral. Both checks apply when taking debt or withdrawing with debt remaining. See liquidations for what happens below 1 and the calculation reference for rounding and technical details. Read the liquidation risk guide for practical examples, then inspect your account on XOXNO lending markets.