Health factor
We compare the total current debt of the token with underlying loans current value and collateral(s) to determine the health.
where,
Health factor
Collateral current value in USD
Loan account current value in USD
Net liabilities (Original loan + interest) in USD
Note: For on-chain computations, we use USDT as base value to compute values.
Health is monitored at two levels:
- 1.dToken level: Determines the total health of the protocol for this asset
- 2.user loan level: Determines health of a user’s individual loan
total value of the debt issued by the contract across the protocol
n is the total number of supported collaterals,
is the net value of the ith collateral locked.
unspent loan amounts + Sum (spent loan amounts)
For the above loan discussed, the health factor can be computed as below:
- 1.Before partial withdrawl
- 1 ETH * 100 = 100
- 300 USDC = 300
- Assuming an interest of 2 USDC accrued,300 + 2 USDC = 302
So, Health factor
(100 + 300)/302 = 1.32
- 2.Post spend
= 3 ETH x $100 = $300
So, Health factor
(100 + 300)/302 = 1.32
Health factor determines if a loan can be liquidated. Read Liquidations for more info.
Last modified 2mo ago