The Health Factor is a key metric in Voltage Lending. It indicates how safe a user’s borrow position is relative to the value of their collateral. If the health factor falls below 1, the position becomes eligible for liquidation.
Health Factor = (Collateral Value × Liquidation Threshold) / Borrowed ValueA Health Factor > 1 means your position is safe.
A Health Factor < 1 means your loan may be liquidated.
Let’s say a user supplies $1,000 of USDC with an 80% liquidation threshold, and borrows $700 of another asset. The health factor would be:
($1,000 × 0.80) / $700 = 1.14As long as the health factor stays above 1.0, the user remains safe.
When a borrower’s health factor drops below 1, a portion of their debt becomes eligible for liquidation. This means that a liquidator can repay up to 50% of the user’s borrowed amount and, in exchange, receive a discounted portion of the collateral.
Triggered by: Drop in collateral value or increase in borrow value
Repaid by: A third-party liquidator (any user on the network)
Liquidation Bonus: Applied to the collateral seized by the liquidator
Liquidation helps maintain the solvency of the protocol and ensures that funds remain available for other users.
Collateral loses value (e.g. market dip)
Borrowed asset increases in value
Accrued interest increases your borrow position
Stablecoins depeg or experience volatility
To avoid liquidation, users can:
Repay part of their borrowed amount
Supply more collateral
Monitor asset prices regularly (via the dashboard)
Parameter
Value (example)
Liquidation Threshold
Set per asset (e.g. 80%)
Max Repay Amount
Up to 50% of borrowed value
Liquidation Bonus
Applied to seized collateral
Trigger Condition
Health Factor < 1.0
Oracles Used
Supra Oracles
All pricing and health factor calculations are powered by Supra, ensuring real-time and secure oracle data on the FUSE network.
Anyone. Liquidations on Voltage are permissionless. Users or bots can monitor the protocol and initiate a liquidation as soon as a position becomes unhealthy. It’s a competitive process often done by bots or experienced DeFi users.
During Beta, liquidation mechanics are active. While caps are in place, users should monitor their health factor closely to avoid loss of collateral.
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