What is a health factor in DeFi lending?
A health factor measures how safe a crypto loan is. Below 1, it can be liquidated. How it's worked out, what moves it and how much buffer to keep.
Updated Nov 8, 2026
In short
A health factor is a single number for how safe a loan on a lending protocol such as Aave is: your collateral's value, adjusted for how much can be borrowed against it, divided by what you owe. Above 1 the loan is safe for now; below 1 it can be liquidated. The further above 1, the bigger the price fall it can take.
How it's worked out
On Aave, the health factor is the value of your collateral multiplied by each asset's liquidation threshold, divided by the value of what you've borrowed. The liquidation threshold is the share of an asset's value that counts towards your borrowing; it's set for each asset.
Aave's own example: you supply $10,000 of ETH with an 80% liquidation threshold and borrow $6,000. Your health factor is 10,000 × 0.8 ÷ 6,000 = 1.33.
Other protocols use other words for the same idea. Morpho compares your loan-to-value with each market's liquidation loan-to-value (LLTV); some show a "debt ratio" or "health rate". They all answer one question: how far can prices move before this loan is liquidated?
What moves it
- Your collateral's price. If ETH falls 20%, a loan backed by ETH loses health with it.
- Your debt's price. If you borrowed something that rises, you owe more.
- Interest. What you owe grows over time.
- Repaying or adding collateral. Both raise it straight away.
What it means for you
Below 1, anyone can repay part of your debt and take the same value of your collateral plus a bonus. That bonus is what a liquidation costs you. Keep enough room above 1 that a normal bad day in the market doesn't get you there, and act well before it gets close: how to avoid liquidation on Aave and Morpho.
In Burokku
Burokku shows the health factor of every Aave and Morpho loan across your wallets on one scale, and can alert you on Telegram, push or email when any of them falls below a number you choose; it starts at 1.5. From the loan itself you can repay or add collateral, and Burokku won't build an Aave withdrawal that would leave a loan below 1.5.
Questions
- What's a good health factor?
- There isn't one number for everyone. It depends on how volatile your collateral is and how often you check. A loan against ETH needs more room than a stablecoin borrowed against a stablecoin. Work out the price fall your loan can take and make sure it's larger than any drop you'd sleep through.
- Does my health factor change if I do nothing?
- Yes. It moves with the prices of your collateral and your debt, and slowly falls as interest builds up on what you've borrowed.