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Health Factor

How adjusted collateral value and debt interact inside a Borrow Spoke to determine position safety.

Overview

The health factor is the protocol's shorthand for the relationship between risk-adjusted collateral value and outstanding debt. It is driven by the same valuation, collateral-factor, and liquidation assumptions used everywhere else in Avana.

When health deteriorates far enough that debt exceeds the allowed borrowing boundary, the position becomes liquidatable under the canonical Liquidation Framework.

Calculation

Health is computed per Borrow Spoke. The numerator is the user's adjusted collateral value inside that spoke, which already reflects position-level valuation, collateral factors, pool-level risk, and conservative recoverable-value assumptions.

healthFactor = adjustedCollateralValue / outstandingDebt

If a user has collateral across multiple Borrow Spokes, each spoke has its own health calculation. One spoke's surplus does not automatically rescue another spoke's shortfall.

Monitoring Bands

Healthy buffer: collateral value remains well above debt, leaving room for normal market movement.

Watchlist: the account still passes checks, but the margin is thinning enough that user action is sensible.

Liquidatable: the account has reached or fallen through the liquidation boundary, so the liquidation process can take over.

Interface warning bands may be more conservative than the hard liquidation boundary, but they should be understood as monitoring aids, not as separate protocol mechanics.

Response Path

If health weakens, the first response is user-driven: repay debt, add approved LP collateral, or reduce exposure through position changes that still pass health checks.

If health crosses the liquidation boundary, the protocol shifts from monitoring to settlement. Liquidation nodes and third-party liquidators can then unwind the minimum required collateral path to restore solvency.

User Actions

  • Borrowing more lowers health because debt rises
  • Repaying debt improves health immediately
  • Adding approved collateral can increase remaining borrowing headroom
  • Claiming fees, withdrawing collateral, or re-ranging positions may reduce health and must be checked carefully

Use Collateral Factors for the numerator logic and Liquidation Framework for what happens once health is no longer sufficient.