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Every borrow position shows a health factor. It measures how much of your liquidation buffer remains, so it answers one question: how close is this position to being liquidated.

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The formula

Both thresholds are percentages, and the LTV is measured at the market’s own oracle price. Because the buffer is the denominator, the scale is anchored to the two points that actually matter: A position with no debt displays as ∞. Values are clamped at zero, so a position past its liquidation threshold reads 0.00 rather than a negative number.

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A worked example

Take a market with an 85% max borrowable LTV and a 90% liquidation threshold, so the buffer is 5 percentage points. Notice how compressed the last stretch is. Moving from an LTV of 85% to 90% (five percentage points) takes you from the borrowing limit all the way to liquidation. On a position borrowed near the maximum, a modest collateral price move covers that distance.

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Why this scale rather than a ratio

Some protocols express health as collateral value divided by debt value, where 1.0 means liquidation. AGI3 uses the buffer-relative form above, so 1.00 means “at the borrowing limit” and 0.00 means “at liquidation”. The practical consequence: on AGI3, a health factor of 1.00 is not the danger point. It is the point at which you have borrowed as much as the market allows. Danger begins below it.

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When the platform warns you

A position is flagged At Risk once its health factor falls below 0.80. At that point it has consumed more than a fifth of its liquidation buffer, and the position card and portfolio summary both surface a warning. The same thresholds drive the band shown against each position:

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What moves your health factor

  • Collateral price falls: LTV rises, health factor falls. The dominant effect for volatile collateral.
  • Debt asset price rises: same direction. Borrowing an asset that appreciates against your collateral works against you.
  • Interest accrues: your debt grows continuously, so health factor drifts down even with completely static prices. A position left alone is not a position holding still.
  • You borrow more or withdraw collateral: both raise LTV immediately.
  • The market changes its parameters: a lower liquidation threshold shrinks the numerator and the buffer at once.
Because interest alone will eventually erode the buffer, a position near the borrowing limit needs monitoring even in a flat market.