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Health Factor

The ratio between risk-adjusted collateral value and outstanding debt inside a Borrow Spoke.

Overview

Health factor measures the relationship between risk-adjusted collateral value and outstanding debt inside a Borrow Spoke. Adjusted collateral value already includes Avana's LP valuation, collateral factors, pool-level risk treatment, and recoverable-value assumptions. If health falls below the liquidation boundary, the position becomes eligible for liquidation. See the Liquidation Framework for what happens next. Borrowing power is the sum of your approved LP positions in one Borrow Spoke, after collateral factors and risk discounts. Each position contributes based on its own pool, range, liquidity, and risk settings.

Calculation

Health is computed per Borrow Spoke. The numerator is adjusted collateral value — already discounted through reconstruction, pricing, collateral factors, and recoverable-value assumptions.

healthFactor = adjustedCollateralValue / outstandingDebt

If a user has collateral in more than one Borrow Spoke, each spoke computes health independently. Extra margin in one market does not cover a deficit in another.

Monitoring Bands

Healthy: adjusted collateral value exceeds debt, leaving a buffer before the liquidation threshold. Watchlist: the account passes health checks but has a smaller buffer. Repayment or additional approved collateral can increase that buffer. Liquidatable: the account has crossed the liquidation threshold and is eligible for the configured liquidation process.

Interface warnings may appear earlier than the hard liquidation threshold to give users time to act.

Response Path

When health weakens, the borrower can repay debt, add approved LP collateral, or take other actions that improve the account under the spoke's health checks. Once health crosses the liquidation boundary, liquidators can begin recovering value from the collateral under the market's liquidation rules.

User Actions

  • Borrowing more reduces health because debt rises against the same collateral.
  • Repaying debt improves health immediately.
  • Adding approved collateral can increase headroom if the spoke accepts and values it.
  • Claiming fees, withdrawing collateral, or changing a position can reduce its collateral contribution. These actions are subject to checks on the resulting account health.

See Collateral Factors for how adjusted collateral value is calculated.