Health factor

We compare the total current debt of the token with underlying loans current value and collateral(s) to determine the health.
Hf=Ccv+LAcvLnetHf = \frac{C_{cv} + LA_{cv}}{L_{net}}Hf=Lnet​Ccv​+LAcv​​
​
where,
​Hf=Hf = Hf=
 Health factor
​Ccv=C_{cv} = Ccv​=
 Collateral current value in USD
​LAcv=LA_{cv} = LAcv​=
 Loan account current value in USD
​Lnet=L_{net} = Lnet​=
 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
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dToken health:
​Lnet=L_{net} = Lnet​=
 total value of the debt issued by the contract across the protocol
 Ccv=Σ1nCicv,C_{cv} = \Sigma_{1}^{n} C_{icv},Ccv​=Σ1n​Cicv​,
 n is the total number of supported collaterals, CicvC_{icv} Cicv​
 is the net value of the ith collateral locked.
​LAcvLA_{cv} LAcv​
 unspent loan amounts + Sum (spent loan amounts)
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User loan health:
For the above loan discussed, the health factor can be computed as below:
1.Before partial withdrawl
​Ccv=C_{cv} =Ccv​=
 1 ETH * 100 = 100
​LAcv=LA_{cv} =LAcv​=
 300 USDC = 300
Assuming an interest of 2 USDC accrued,
​
 300 + 2 USDC = 302
​
So, Health factor (Hf)=(Hf) =(Hf)=
 (100 + 300)/302 = 1.32
2.Post spend
​LAcvLA_{cv}LAcv​
 = 3 ETH x $100 = $300
So, Health factor (Hf)=(Hf) =(Hf)=
 (100 + 300)/302 = 1.32
​
Health factor determines if a loan can be liquidated. Read Liquidations for more info.
Last modified 2mo ago