What is a health factor in DeFi lending?

Health factor is a numeric score that represents the safety of your collateralised loan on protocols like Aave or Compound. It is calculated as: Health Factor = (Collateral Value × Liquidation Threshold) ÷ Total Borrowed. A health factor above 1.0 means your position is safe. When it falls to exactly 1.0, your collateral equals the minimum required to back your debt, and liquidation is triggered. A health factor of 2.0 means your collateral can halve in value before you are liquidated. Most DeFi users aim to keep HF above 1.5 as a safety buffer.

What happens when my health factor drops below 1?

When your health factor drops below 1.0, your position becomes eligible for liquidation. A liquidator can repay up to 50% of your outstanding debt and receive your collateral at a discount (typically 5-15% liquidation bonus) in exchange. This means you lose more than just the minimum needed to repay the debt. After liquidation, your health factor is restored above 1.0 but you have less collateral. To avoid liquidation: monitor your HF closely, add more collateral, or repay part of your debt. Aave sends health factor alerts via their app.

What is the difference between Max LTV and Liquidation Threshold?

Max LTV (Loan-to-Value) is the maximum percentage of your collateral value you can borrow at the time of taking a loan. Liquidation Threshold is slightly higher and is the ratio at which your position becomes liquidatable. For example, on Aave v3 for ETH: Max LTV is 80% (you can borrow up to $8,000 against $10,000 of ETH), but the Liquidation Threshold is 82.5% (liquidation triggers when your debt reaches 82.5% of collateral value). The gap between LTV and LT provides a small buffer. Never borrow at Max LTV — always keep a meaningful buffer below the liquidation threshold.

Free Tools DeFi Health Factor Calculator

🏥

DeFi & Yield

DeFi Health Factor Calculator

Calculate health factor for Aave, Compound, and any over-collateralised DeFi protocol. Three calculators in one: health factor checker, max safe borrow, and token liquidation price. Supports any LTV and liquidation threshold.

No data collected

How This Tool Works

This tool implements the Aave v3 health factor formula used by all major over-collateralised DeFi lending protocols.

Health Factor = (Collateral × Liquidation Threshold) ÷ Total Borrowed
Liquidation Price = Borrowed ÷ (Token Amount × Liquidation Threshold)
Safe Borrow = (Collateral × LT) ÷ Target HF

A health factor of 1.0 = liquidation boundary. HF of 2.0 = collateral can halve before liquidation. Use the three tabs: check your current HF, find your safe borrow limit at a target HF, or find the token price that would trigger liquidation.

Learn the Concepts

On-Chain Social Media: Farcaster, Lens Protocol, and Friend.tech Explained

On-chain social media protocols store social graphs, posts, and identities on bl…

Solana in 2026: Ecosystem, Performance, and Competitive Position

Solana in 2026 has emerged as the dominant high-performance blockchain for consu…

Uniswap v4 Hooks Explained: Customizable AMM Logic

Uniswap v4 introduced "hooks" — customizable smart contracts that can inject log…

Intent-Based Trading in DeFi: CoW Protocol, UniswapX, and 1inch Fusion

Intent-based trading is a DeFi execution model where users declare the outcome t…

Restaking and EigenLayer in 2026: EIGEN Token and AVS Ecosystem

EigenLayer is a restaking protocol that allows Ethereum stakers to reuse their s…

Browse full crypto glossary (5+ terms) →

Other Free Tools

📊

Risk & Position Size Calculator

Risk Management

📈

DCA Investment Planner

Investment Planning

💹

Profit / Loss Calculator

Trade Analysis

⚡

Liquidation Price Calculator

Futures Trading

Related Trading Guides

Security

Bitcoin Wallet Security in 2026: Lessons from the $114 Million Coldcard Exploit

The August 2026 Coldcard exploit — which drained over $114 million from Bitcoin wallets through an entropy vulnerability that never required touching the physical device — has rewritten the standard for hardware wallet security. This guide explains the attack mechanics, what affected users must do, and a comprehensive framework for protecting Bitcoin holdings in 2026.

Trading Basics

How to Read a Crypto Order Book: Bid-Ask Spread, Depth Charts, and Market Microstructure

The order book is the most fundamental tool in crypto market analysis. This complete guide covers bid-ask spread, order book depth, the difference between market and limit orders, iceberg orders, spoofing, and order flow analysis — everything needed to read market microstructure fluently.

Passive Income

Restaking in 2026: How EigenLayer, Symbiotic, and Liquid Restaking Tokens Stack ETH Yield

Restaking lets staked ETH simultaneously secure additional decentralised services, earning supplementary yield. This guide explains EigenLayer and Symbiotic mechanics, liquid restaking tokens, yield stacking strategies, and the risks every restaker must understand in 2026.

Browse all trading guides →

Free Newsletter

Enjoyed this tool? Get more like it.

New tools, trading guides, and market analysis delivered weekly. No spam, unsubscribe anytime.