LayerBank Health Factor
Health Factor summarizes how safely a borrow position sits relative to its collateral and permitted borrowing limits.
What Is Health Factor?
Health Factor is a position-safety metric derived from collateral value and borrowed value. As debt grows or collateral loses value, the position moves closer to its liquidation threshold.
A larger buffer generally means more room before liquidation conditions are reached. Exact thresholds and parameters depend on the selected LayerBank market.
What Changes Health Factor?
- Collateral prices: falling collateral value can reduce position safety.
- Borrowed-asset prices: rising debt value can reduce the buffer.
- Accrued borrow interest: debt increases over time while a borrow is open.
- Collateral changes: supplying more collateral can improve the buffer; withdrawing collateral can reduce it.
- Repayment: reducing debt can improve Health Factor.
Health Factor vs Max LTV
Max LTV describes borrowing capacity when opening or changing a position. Health Factor reflects the safety of the live position after prices and debt have changed. Both should be reviewed together rather than treating the original borrow limit as permanent.
Read Collateral & Liquidation for the liquidation process.
How to Monitor Position Safety
Use LayerBank Manage to review collateral, supplied assets and borrowed balances. Avoid relying on a single snapshot: prices and interest can change, especially during volatile markets.
Frequently Asked Questions
What is a safe LayerBank Health Factor?
There is no universal safe value for every market. A larger buffer above the liquidation threshold provides more room for price changes and accrued interest.
Can Health Factor change without a new transaction?
Yes. Asset prices and accrued borrow interest can change position safety even when the user does not submit a new transaction.
How can I improve Health Factor?
Depending on the market, repaying debt or adding eligible collateral can improve position safety. Always review the resulting LTV and liquidation threshold.
Reviewed for layerbank.trade on November 2, 2026.