Loan Health Factor Calculator
Solve the overcollateralised loan identity HF = ( Collateral × LTV ) ÷ Debt for any of its four variables — the health factor, the collateral value, the liquidation threshold, or the outstanding debt — with step-by-step math, a live liquidation-risk gauge, a buffer-to-liquidation analysis, an interest-accrual time-to-liquidation projection, a target-HF reverse solve, and a borrow-capacity helper.
Liquidation triggers when collateral value × liquidation threshold = debt. That means your collateral can fall to debt ÷ threshold before anything happens, which is a 1 − 1/HF percentage drop. Enter a collateral price to see the absolute trigger level. Note the asymmetry: at HF = 1.5 you have a 33% buffer; at HF = 1.1 you have only a 9% buffer; at HF = 1.02 you have a 2% buffer and a single wick can take you out.
If the collateral price is flat, the debt still grows and the health factor still falls. Time to liquidation is ln(HF) ÷ ln(1 + APR ÷ 365) days — it is the moment the growing debt equals the risk-adjusted collateral. At a 5% borrow rate and HF = 1.5, that is roughly 8 years, which is comfortable. At HF = 1.05, it is about 1 year. The dangerous scenario is both happening at once: price falls and debt accrues, which compresses the timeline dramatically.
To raise HF to a target, you can either repay debt or add collateral. Repaying is usually cheaper because it does not require buying more of a volatile asset, and it reduces the debt that accrues interest. The debt required at the target HF is collateral × LTV ÷ target HF, so the repayment needed is current debt − target debt. The collateral required is debt × target HF ÷ LTV, so the addition needed is target collateral − current collateral. Either path produces the same HF, but the repay path reduces your interest expense while the add path increases your exposure.
Borrow capacity is collateral × liquidation threshold — the absolute maximum you could borrow before HF hits 1.0. Most protocols cap you at the lower max-LTV figure at origination, which is why you cannot usually borrow up to capacity in a single transaction. The safe-borrow rows show the maximum debt consistent with each target HF: debt at HF 1.5 = capacity ÷ 1.5, and so on. Borrowing to a target HF of 2.0 leaves you with a 50% buffer against a collateral price fall; borrowing to HF 1.2 leaves only a 17% buffer.
HF = 1.0 is the liquidation line, not a target
The health factor is a ratio, and 1.0 is the point at which the risk-adjusted collateral exactly equals the debt. At HF = 1.0 a liquidator can repay part of your debt and receive a bonus (typically 5–10% of the repaid amount) from your collateral. Below 1.0, liquidation is not only possible but profitable for any bot watching the position — which means it happens within the same block on most chains. Treating HF = 1.0 as "safe enough" is the single most common mistake in leveraged DeFi. A position at 1.05 has less than a 5% buffer and can be liquidated by a single hourly candle on a volatile asset.
Both numerator and denominator move against you
Most borrowers focus only on the collateral price, because that is the visible driver. But the debt also moves: it accrues interest continuously, so the denominator grows every single block. On a 5% APR stablecoin borrow, the debt grows about 0.0137% per day, which is small — but on a variable-rate borrow that spikes to 20% during high utilisation, it grows 0.05% per day, or 1.5% per month. Both effects compound against the position simultaneously, and the timeline to liquidation under interest accrual alone is ln(HF) ÷ ln(1 + APR/365) days — a number most borrowers have never calculated.
Diversification across correlated assets does not help
If you deposit ETH and WBTC as collateral and borrow a stablecoin, your collateral is not diversified — both assets are highly correlated and can fall together. The health factor uses the total collateral value, so a simultaneous 30% fall in both assets reduces HF by 30% regardless of how many assets you hold. The only diversification that helps is depositing assets that move against each other, or depositing stablecoins as collateral while borrowing a volatile asset (which creates a different risk profile entirely). The health factor does not care how many assets are in the basket — only the total value.
Liquidation is not a partial loss — it is a cascade
When a position is liquidated, the liquidator repays a portion of the debt and takes an equivalent amount of collateral plus a bonus. This reduces your debt but also reduces your collateral, so the health factor does not reset to 1.5 — it resets to just above 1.0, and the position remains fragile. If the price keeps falling, the position gets liquidated again, and again, until the debt is either fully repaid or the collateral is exhausted. On some protocols liquidators can close up to 50% of the position per call, so a large liquidation can consume most of your collateral in a few blocks. The liquidation penalty (5–10%) is a real cost paid to the liquidator, not to the protocol.
How to Use This Calculator
The health factor relation links four quantities: the health factor, the collateral value, the liquidation threshold, and the outstanding debt. Pick which one you want the tool to solve, then fill in the other three.
1. Choose what to solve for
Pick HF, Collateral, LTV, or Debt from the toggle. The calculator rearranges HF = (Collateral × LTV) ÷ Debt automatically for whichever variable you choose and greys out that field.
2. Use the liquidation threshold, not max LTV
DeFi protocols publish two numbers: the max LTV at origination (say 80% for ETH) and the liquidation threshold (82.5% for Aave v3 ETH). The health factor uses the liquidation threshold. Check your protocol's docs for the correct figure — using max LTV will make your HF look safer than it is.
3. Enter debt including accrued interest
Outstanding debt is not the amount you originally borrowed — it is the current amount owed, including all interest accrued since origination. On a stablecoin borrow at 5% APR, that is roughly 5% higher after a year. Use the protocol's current debt figure, not your memory of the original transaction.
4. Read the gauge and the buffer
The result card places HF on a log-scale band from 0.5 to 5.0 with tick marks at 1.0, 1.5, 2.0, and 3.0, and shows the buffer to liquidation as a percentage. A 33% buffer (HF 1.5) is comfortable; a 9% buffer (HF 1.1) is dangerous; a 2% buffer (HF 1.02) is one candle away from liquidation.
5. Check the time to liquidation under interest
Enter the borrow APR to see how long the position can survive if the collateral price is flat. This is the quiet killer — a position at HF 1.05 with a 20% borrow APR on a variable rate is liquidatable in under a year even with no price move. On a variable-rate market that spikes to 50% during high utilisation, the timeline shrinks dramatically.
6. Switch to Advanced for depth
Advanced mode adds a health-factor-vs-time chart showing the decay under interest accrual, a sensitivity check on ±1% input changes, and companion metrics including the current LTV, capacity utilisation, the collateral price at liquidation, and the debt required at multiple target HFs.
What This Tool Offers
Built around the overcollateralised loan identity HF = (Collateral × LTV) ÷ Debt, the number that decides whether a leveraged DeFi position survives the next candle.
Four-way solving
Solve for the health factor, the collateral value, the liquidation threshold, or the outstanding debt. The calculator rearranges the formula for whichever variable you choose.
Liquidation analysis
The collateral value at which liquidation triggers, the percentage price drop required, and a visual buffer bar showing how much room you actually have at the current HF.
Time to liquidation
Enter the borrow APR to see how long the position survives if the collateral price is flat, and how the health factor decays over 30 days under interest accrual alone.
Target HF reverse solve
Enter a target health factor to see how much debt to repay or how much collateral to add — and the collateral units required at the current price.
Borrow capacity
Risk-adjusted capacity, currently available borrowing, and the maximum safe debt at HF 1.5, 2.0, and 3.0 — with capacity utilisation as a percentage.
Reference tables
A live HF converter, an HF lookup grid, a liquidation-threshold reference by asset and protocol, and a full variable reference.
Reference Tables & Conversions
A live HF converter, an HF lookup grid, and the liquidation thresholds for major DeFi protocols and assets.
Collateral · LTV · debt · HF converter
Health Factor Lookup — LTV × Debt-to-Collateral
Each cell shows the resulting health factor for a given liquidation threshold and debt-to-collateral ratio. Values below 1.0 are highlighted — those positions are liquidatable.
| LTV ↓ / D÷C → | 10% | 25% | 40% | 50% | 60% | 70% | 80% | 90% |
|---|
Health Factor Bands & Action Guide
What each health factor level means in practice, and what action it warrants.
| Health Factor | Buffer | Risk level | Collateral move to liquidate | Recommended action |
|---|---|---|---|---|
| < 1.00 | Negative | Liquidatable | Already breached | Repay immediately or add collateral — every block risks liquidation |
| 1.00 – 1.05 | 0% – 4.8% | Critical | A 5% candle on a volatile asset | Repay at least 20% of debt or add 25% more collateral within the hour |
| 1.05 – 1.15 | 4.8% – 13% | Dangerous | One bad day, easily | Repay to HF 1.5 or add collateral to reach 1.5 today |
| 1.15 – 1.30 | 13% – 23% | Caution | A normal 20% correction | Set alerts, plan a repayment schedule, consider deleveraging |
| 1.30 – 1.50 | 23% – 33% | Safe | A significant correction needed | Monitor weekly; the position is comfortable but not immune |
| 1.50 – 2.00 | 33% – 50% | Comfortable | Requires a bear-market-scale fall | Standard leveraged position; check once a month |
| 2.00 – 3.00 | 50% – 67% | Very safe | A 50%+ crash needed | Comfortable but capital-inefficient — consider borrowing more |
| > 3.00 | 67%+ | Over-collateralised | Requires a catastrophic event | You are leaving borrowing power unused; borrow more or withdraw collateral |
Typical Liquidation Thresholds by Protocol and Asset
Representative figures. Always confirm the current parameters in the protocol's documentation or dashboard — thresholds change with governance votes and risk parameters.
| Protocol | Asset | Max LTV | Liquidation threshold | Liquidation penalty | Notes |
|---|---|---|---|---|---|
| Aave v3 (Ethereum) | ETH | 80.5% | 82.5% | 5.0% | Two numbers differ; HF uses the threshold |
| Aave v3 (Ethereum) | wstETH | 78.5% | 80.0% | 5.0% | Liquid staking derivative; slightly stricter |
| Aave v3 (Ethereum) | WBTC | 73.0% | 78.0% | 6.5% | Higher penalty for wrapped assets |
| Aave v3 (Ethereum) | USDC | 77.0% | 80.0% | 4.0% | Stablecoin collateral; can be borrowed at higher LTV |
| Aave v3 (Ethereum) | USDT | 75.0% | 78.0% | 4.0% | Slightly stricter than USDC due to perceived risk |
| Aave v3 (Ethereum) | DAI | 77.0% | 80.0% | 4.0% | Stablecoin collateral |
| Compound v3 (Ethereum) | ETH | — | 82.5% | 5.0% | Single-borrowable-asset model |
| Compound v3 (Ethereum) | USDC | — | 82.5% | 5.0% | Same threshold for most collateral |
| MakerDAO | ETH-A | — | 145% collateralisation | 13% penalty | Expressed as collateral ratio, not LTV — HF = collateral ÷ (debt × 1.45) |
| MakerDAO | USDC-A | — | 101% collateralisation | 13% penalty | Nearly 100% — stablecoin on stablecoin |
| Morpho Blue | Variable | Variable | Set by each market creator | Variable | Permissionless — parameters are per-market |
| Spark Protocol | ETH | 80.5% | 83.0% | 5.0% | Aave v3 fork with slightly different parameters |
Variable Reference
| Symbol | Meaning | Typical range | Units |
|---|---|---|---|
| HF | Health factor | 0.8 – 5.0 | ratio (dimensionless) |
| C | Collateral value | 10 – 10⁹ | USD |
| LTV | Liquidation threshold | 50 – 95 | % (use threshold, not max LTV) |
| D | Outstanding debt | 10 – 10⁹ | USD (including accrued interest) |
| Buffer | 1 − 1 ÷ HF | 0 – 100 | % collateral price fall to trigger |
| LTVcurrent | D ÷ C | 0 – 95 | % (must be below LTV threshold) |
| APR | Borrow interest rate | 0 – 100 | % per year |
What Does HF = ( Collateral × LTV ) ÷ Debt Measure?
The health factor is the single most important number in a leveraged DeFi position. It answers a narrow, brutal question: how far can the collateral price fall before a liquidator can take my position? A health factor of 1.0 means the answer is "not at all" — the position is at the exact threshold where liquidation becomes profitable. A health factor of 1.5 means the collateral can fall 33% before that happens. A health factor of 3.0 means it can fall 67%. The number is simple, but the implications are not, because both the numerator and the denominator move continuously against the borrower.
Health Factor Formula
The defining relationship is:
where LTV is the liquidation threshold expressed as a decimal, not the max LTV at origination. Rearranged to solve for the other three unknowns:
LTV = Debt × HF ÷ Collateral
Debt = Collateral × LTV ÷ HF
The buffer to liquidation is the percentage fall in collateral value that would take HF to exactly 1.0:
The collateral value at the liquidation trigger is:
And the current loan-to-value ratio, which must always sit below the liquidation threshold for the position to be healthy, is:
Under interest accrual with a flat collateral price, the health factor decays according to:
Days to liquidation = ln( HF₀ ) ÷ ln( 1 + APR ÷ 365 )
Health Factor Variables
| Symbol | Meaning | Notes |
|---|---|---|
| HF | Health factor | 1.0 is the liquidation line; below 1.0 is liquidatable |
| C | Collateral value | Market value of deposits, moves with price |
| LTV | Liquidation threshold | The LTV at which liquidation triggers, not the max LTV at origination |
| D | Outstanding debt | Principal plus all accrued interest, growing every block |
| Buffer | 1 − 1 ÷ HF | Percentage collateral fall before liquidation |
| APR | Borrow interest rate | Variable on most protocols; can spike with utilisation |
How Each Variable Affects the Health Factor
HF is linear in collateral, linear in the liquidation threshold, and inversely proportional to debt. A 10% fall in the collateral value reduces HF by 10%. A 10% increase in the debt reduces HF by roughly 9.1% (it is inverse, not linear). The liquidation threshold is the protocol's risk parameter and does not change with market conditions for a given asset, though governance can adjust it. For a position at HF 1.5, a 10% collateral fall reduces HF to 1.35, still safe. For a position at HF 1.15, the same 10% fall reduces HF to 1.035, which is critical. The starting point matters enormously — this is why borrowers who maintain HF above 1.5 survive normal corrections while those who borrow to the maximum get liquidated in the first drawdown.
The buffer is the most intuitive way to read the health factor, because it converts the ratio into a percentage. At HF 2.0 the buffer is 50%, meaning the collateral can halve before liquidation. At HF 1.5 the buffer is 33%. At HF 1.2 the buffer is 17%. At HF 1.05 the buffer is just 4.8%. Volatile crypto assets routinely move 5% in an hour and 15% in a day, so an HF below 1.3 is genuinely dangerous even for a patient borrower — the position can be liquidated by an ordinary move rather than a black-swan event.
The debt growth under interest is the slower but equally real threat. A 5% borrow APR compounds to roughly 5.13% over a year, which reduces HF by about 4.9%. That is modest. But variable-rate borrow markets spike under high utilisation: when a lending pool is 95% utilised, the borrow rate can rise to 50% or more. At 50% APR the debt grows 0.11% per day, which reduces HF by 0.11% per day — enough to take a position from HF 1.5 to HF 1.0 in roughly 370 days with no price move at all. The combination of a falling collateral price and a rising borrow rate is what turns a comfortable position into a liquidated one in a matter of weeks.
Finally, the liquidation threshold is not one number per protocol — it is one number per asset per protocol, and it changes with governance. Stablecoin collateral is treated differently from volatile collateral. Liquid staking derivatives carry their own thresholds. Wrapped assets get slightly stricter parameters. When you compute your health factor, check the threshold for the specific asset you have deposited, not the protocol's headline number. Using the wrong threshold — particularly using the max LTV instead of the liquidation threshold — will make your HF look safer than it is by a few percentage points, which is exactly the margin that matters when the position is near the line.
Health Factor Calculation Examples
HF = ( 100,000 × 0.75 ) ÷ 50,000 = 1.5000
Buffer = (1 − 1 ÷ 1.5) × 100 = 33.33%
Collateral = 50,000 × 1.5 ÷ 0.75 = $100,000
LTV = 50,000 × 1.5 ÷ 100,000 = 0.75 = 75.00%
Debt = 100,000 × 0.75 ÷ 1.5 = $50,000
Collateral at liquidation = 50,000 ÷ 0.75 = $66,666.67
Price drop required = (100,000 − 66,667) ÷ 100,000 = 33.33%
Days = ln(1.5) ÷ ln(1 + 0.05 ÷ 365) = ~2,952 days ≈ 8.1 years
The debt grows slowly at 5% APR — this is the safe scenario
Days = ln(1.5) ÷ ln(1 + 0.50 ÷ 365) = ~296 days ≈ 10 months
A variable-rate spike cuts the timeline by a factor of ten
Debt at HF 2.0 = 100,000 × 0.75 ÷ 2.0 = $37,500
Repay = 50,000 − 37,500 = $12,500
Collateral at HF 2.0 = 50,000 × 2.0 ÷ 0.75 = $133,333
Add = 133,333 − 100,000 = $33,333
Frequently Asked Questions
There is no universal answer because it depends on the volatility of the collateral. For ETH or WBTC as collateral, an HF above 1.5 is generally considered safe, above 2.0 is comfortable, and above 3.0 is over-collateralised. For stablecoin collateral, an HF of 1.2 is often adequate because the price barely moves. For long-tail altcoins with 10% daily volatility, even an HF of 2.0 can be liquidated in a single bad day. A useful rule: keep the buffer to liquidation larger than the maximum daily move you expect on the collateral. If the asset can drop 20% in a day, you need an HF of at least 1.25 just to survive one day — and 1.5 or higher to survive a multi-day drawdown.
Two separate protocol parameters, and confusing them is one of the most common mistakes. The max LTV is how much you can borrow at origination — on Aave v3 for ETH it is 80.5%. The liquidation threshold is the LTV at which your position becomes eligible for liquidation — on Aave v3 for ETH it is 82.5%. The gap between them (2 percentage points on ETH) exists so that a position at maximum origination LTV still has a small buffer before liquidation triggers. The health factor uses the liquidation threshold, not the max LTV. If you use 80.5% instead of 82.5% in this calculator, your HF will appear about 2.4% lower than reality — which is a conservative error, but an error nonetheless. Check your protocol's specific figures.
Liquidation becomes profitable for anyone watching, and on most chains it happens within the same block. A liquidator repays a portion of your debt — typically up to 50% of the position on Aave — and in return receives an equivalent amount of your collateral plus a bonus (5–10% depending on the asset). The liquidation penalty is paid to the liquidator, not the protocol, and it comes out of your collateral. The health factor does not reset to a comfortable level after liquidation — it resets to just above 1.0, because the liquidation only removes enough debt to make the position solvent again. If the price keeps falling, the position gets liquidated again, in a cascade that can consume most of your collateral in a short window.
The debt is the denominator of the health factor, so as interest accrues, the denominator grows and HF falls. On a stable 5% APR borrow, the effect is modest — about 5% per year, which reduces HF from 1.5 to roughly 1.43 after a year. But variable-rate markets spike under high utilisation: when a lending pool is 90% utilised, the borrow rate can rise to 30–50% or more. At 50% APR, the debt grows 0.11% per day and HF falls at the same rate, which takes a position from 1.5 to 1.0 in about ten months with no price move at all. On protocols with variable rates, always check the current borrow rate and the utilisation of the pool — a quiet position can become urgent in weeks.
Both work, and they have different implications. Repaying debt reduces the denominator, which improves HF and also reduces the interest you pay going forward — a double benefit. It is usually the cheaper and more prudent action. Adding collateral increases the numerator, which improves HF but leaves your interest expense unchanged and increases your exposure to the volatile asset. On most protocols, repaying is the better option when you have the stablecoins to do it, and adding collateral is the only option when you do not. The relationship is asymmetric: a $1,000 repayment improves HF slightly more than a $1,000 collateral addition, because the repayment affects the denominator directly.
Only if the assets are not correlated. The health factor uses the total collateral value, so two assets that fall together (ETH and WBTC, for example) do not provide any diversification — if both fall 30%, your HF falls 30% regardless of how many assets you hold. To actually diversify, you need assets that move independently or in opposite directions. Depositing a stablecoin alongside ETH does provide real diversification, because the stablecoin does not fall when ETH falls. But if you are borrowing a stablecoin against a stablecoin, you have created a different risk profile entirely — the collateral is stable and the debt is stable, so HF barely moves with market conditions, but the yield on the deposit is usually lower than the borrow cost, which is not the trade you are looking for.
Leverage is a function of the current LTV. If you deposit $100,000 of collateral and borrow $50,000, your leverage is roughly 1.5× (you control $150,000 of exposure with $100,000 of equity). The formula is leverage = collateral ÷ (collateral − debt) = 1 ÷ (1 − LTV). At 50% LTV, leverage is 2×. At 66.7% LTV, leverage is 3×. At 75% LTV, leverage is 4×. At 80% LTV, leverage is 5×. And the health factor is HF = LTV_threshold ÷ LTV_current, so a position borrowed to 75% current LTV with an 82.5% liquidation threshold has an HF of 1.1 — very close to liquidation. This is why high leverage and high health factors are mutually exclusive: you cannot have 4× leverage and an HF of 2.0 simultaneously, because the leverage IS the risk.
Variables
| Symbol | Quantity | Unit |
|---|---|---|
| Health Factor | Loan health factor | |
| Collateral Value | Current value of posted collateral | currency |
| Liquidation Threshold | Protocol's liquidation threshold ratio | |
| Debt Value | Current value of debt owed | currency |
What it means
In DeFi lending, the health factor indicates the safety of a loan. A value >1 means the loan is safe; if it falls below 1, liquidation occurs. It is calculated using the collateral value, liquidation threshold (e.g., 80%), and debt value. This is used by borrowers to monitor their positions and to avoid liquidation. Understanding this is essential for using DeFi lending platforms.
Worked example
Loan Health Factor – Two Detailed Examples
Real‑World| Parameter | Value |
|---|---|
| Collateral Value | $15,000 |
| Liquidation Threshold | 0.80 |
| Debt Value | $10,000 |
| Parameter | Value |
|---|---|
| Collateral | $12,000 |
| Threshold | 0.75 |
| Debt | $10,000 |
Common mistakes
- Collateral value: The current market value of the collateral.
- Liquidation threshold: The percentage of collateral value that triggers liquidation (e.g., 80%).
- Debt value: The outstanding loan amount.
- Health factor: >1 means safe; <1 indicates risk of liquidation.
Applications
Loan health factor (overcollateralised) measures the ratio of collateral value (adjusted by liquidation threshold) to debt value, indicating the safety margin before liquidation. A health factor above 1 indicates a safe position; below 1 risks liquidation. Borrowers use it to monitor their positions and to add collateral or repay debt to avoid liquidation. This is a critical metric in DeFi lending protocols. Understanding the health factor helps borrowers manage their risk effectively.
- Monitoring the safety of overcollateralised loans
- Deciding when to add collateral or repay debt
- Managing liquidation risk in DeFi lending
- Assessing the stability of a borrowing position
- Educational understanding of DeFi lending mechanics
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