> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dyxy.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Health factor

> The number that tells you how safe your loan is, and how to keep it out of liquidation.

The health factor measures how much buffer your loan has before it can be liquidated.

**Health factor = (collateral value × liquidation threshold) ÷ debt value**

| Health factor | Status |
| - | - |
| Above 2 | Comfortable buffer |
| 1.5 to 2 | Moderate |
| 1.1 to 1.5 | At risk. A normal market move can trigger liquidation |
| 1 or below | The loan can be liquidated |

## Example

You have $20,000 of ETH collateral, an 85% liquidation threshold and $10,000 of USDC debt.

**Health factor = ($20,000 × 0.85) ÷ $10,000 = 1.7**

If ETH falls 30%, your collateral is worth \$14,000, and the health factor drops to 1.19. If ETH falls about 41%, the health factor reaches 1 and the loan can be liquidated.

## What moves your health factor

| Down (riskier) | Up (safer) |
| - | - |
| The collateral price falls | The collateral price rises |
| The borrowed asset's price rises | The borrowed asset's price falls |
| Interest accrues on your debt | You repay part of the debt |
| You borrow more | You add more collateral |
| You withdraw collateral | |

## What happens in a liquidation

When the health factor reaches 1, liquidators can repay part of your debt and take the same value of your collateral, plus a liquidation penalty. You keep the borrowed funds and the rest of your collateral, but you lose the penalty.

How much of a loan is liquidated at once, and the size of the penalty, depends on the protocol and the market. Some protocols liquidate only enough to restore a healthy position.

## Staying safe

> **Borrow conservatively**
>
> Keep your LTV well below the maximum. A health factor of 1.5 or more leaves room for volatility.

> **Watch it in volatile markets**
>
> Your health factor is shown on every loan and in your Portfolio.

> **Add collateral**
>
> Depositing more collateral raises the health factor immediately.

> **Repay part of the debt**
>
> Repaying even a small part lowers your LTV.


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