πͺ Hello, Cephei community!
Today we will explain what Health Factor is and how to keep your positions safe from liquidations.
π‘ Understanding the terming
Crucial parameter of every debt position is Health Factor (HF). This is a convenient representation of your collateral-to-debt ratio.
Higher this value β the safer position.
π‘ What should HF be equal to?
Normal value of HF should be always greater than 1. Value itself can change due to currency prices and total debt you owe to lending.
If your HF is below 1, then position may be liquidated.
π‘ No incidents can happen
Coin prices are taken from well-known and confident oracle so you can be sure that currency will be always actual and correct.
π‘ How to prevent liquidation
So we understand that our Health Factor should be greater than 1. This is achievable only with such condition:
Collateral X Loan-To-Value > Debt
For example, you have deposited 100$ in TON and get 70$ in cUSD from lending protocol and LTV for TON is 0.9 β as the result youβll get HF near 1.3 for your position.
π The most optimal value for Health Factor is 1.7 β such risk management will secure your position from any bad causes.
For more information you can use our gitbook, where we explained other features related to liquidations β link
πͺ Our resources:
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