Collateral Health Factor Calculator
The health factor is the single number DeFi lending protocols use to flag liquidation risk. It weighs your collateral by its liquidation threshold and divides by your debt: above 1 is safe, at or below 1 means liquidation. This calculator takes your collateral value, the liquidation threshold, and your debt to return the health factor and how much collateral can fall before you hit the liquidation point.
Health factor formula
Health factor = (collateral value * liquidation threshold) / debt
Collateral drop to liquidation = (1 - 1 / health factor) * 100
The liquidation threshold is entered as a percent and used as a decimal. A health factor above 1 is safe; the drop figure shows how far collateral value can fall before the factor reaches 1.
Reading the result
- A health factor above 1 means the weighted collateral still covers the debt.
- At a health factor of 1, any further fall triggers liquidation.
- The drop figure is the percentage decline in collateral value that would push the factor to 1.
- Higher-volatility collateral warrants a larger health-factor buffer.
Health factor: frequently asked questions
What is a health factor?
A health factor is a single number that measures how safe a DeFi borrowing position is. It is the collateral value times the liquidation threshold, divided by the debt. A health factor above 1 means the position is safe; at or below 1 the position can be liquidated.
What is the liquidation threshold?
The liquidation threshold is the fraction of your collateral value that counts toward covering debt before liquidation. An 80% threshold means each dollar of collateral supports up to 80 cents of borrowing capacity at the liquidation point. Each asset has its own threshold set by the protocol.
What health factor is safe?
A health factor of exactly 1 is the liquidation point, so anything close to 1 is risky. Many borrowers keep a buffer well above 1, often 1.5 to 2 or higher, so a sudden drop in collateral value does not push them into liquidation. The right buffer depends on how volatile your collateral is.
What happens when the health factor falls below 1?
When the health factor drops to 1 or below, usually because collateral value falls or debt grows, the position becomes eligible for liquidation. A liquidator repays part of the debt and seizes collateral plus a bonus, reducing your position. Keeping a comfortable buffer avoids this.
Sources and method
- The health factor is the standard collateral-weighting identity: collateral times liquidation threshold, divided by debt. All inputs are user-editable; no protocol threshold is hardcoded.
- U.S. Securities and Exchange Commission: Investor.gov on decentralized lending risk.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.