How to avoid liquidation on Aave and Morpho
How liquidation works on Aave and Morpho, what moves your health factor, how much buffer to keep, and how to be warned and act before a loan is at risk.
Updated Nov 8, 2026
In short
On Aave, a loan can be liquidated once its health factor falls below 1; on Morpho, once its loan-to-value passes the market's liquidation threshold. Keep a buffer that suits how volatile your collateral is, get an alert well before the line rather than at it, and act early: repay a little or add collateral. If you can't watch it yourself, a guard can do it for you within limits you set.
Borrowing against crypto is useful until the market drops while you're asleep. A liquidation sells part of your collateral at a discount to repay your debt, and you lose the bonus the liquidator takes. It's avoidable, mostly by seeing it coming early enough to do something.
How liquidation works
On Aave, every loan has a health factor: the value of your collateral, multiplied by each asset's liquidation threshold, divided by what you've borrowed. Aave's own example: supply $10,000 of ETH with an 80% liquidation threshold, borrow $6,000, and your health factor is 1.33. Below 1, the loan can be liquidated. Anyone can do it, and they compete to be first.
On Morpho, each market has a liquidation loan-to-value (LLTV). Your loan-to-value is what you've borrowed divided by the value of your collateral; once it passes the market's LLTV, the position can be liquidated in full or in part. Burokku shows Morpho loans with a health factor too, so you can compare them with Aave on one scale.
What moves your health factor
- Your collateral falls. The most common cause: ETH drops 15% and your health factor drops with it.
- Your debt rises. If you borrowed something volatile, a rally in it works against you.
- Interest builds up. Slowly, your debt grows while you hold the loan.
- The protocol changes a parameter. Liquidation thresholds and LLTVs are set by governance or by the market, and can differ between assets and markets.
Pick a buffer you can live with
Ask how far your collateral could fall before you'd notice and act. If you check once a day and ETH can fall 25% in a day, a loan that liquidates after a 15% fall isn't safe for you. A useful rule: work out the price at which you'd be liquidated, then keep it further away than the largest drop you'd sleep through. Correlated pairs, such as a stablecoin against a stablecoin, can run closer.
Be warned before it's close
In Burokku, a health factor alert tells you when any loan falls below the number you choose; it starts at 1.5. It reaches you on Telegram, push or email, with the loan, its health factor and what would fix it. The Lend & borrow tool shows how safe each loan is and what a fall would do, and you can ask Burokku AI things like "Is my Aave position safe if ETH drops 20%?"
Act early
When the alert comes, you have three moves:
- Repay part of the debt. Even a small repayment can lift the health factor a long way.
- Add collateral. Supply more of what you've already pledged, or something steadier.
- Reduce the risk of the collateral itself. Swap part of a volatile asset into one that moves less.
From Burokku you can repay an Aave loan or add collateral from the loan itself, signed in your own wallet.
Let a guard do it
If you can't be sure to act in time, the liquidation guard repays or tops up Aave and Morpho loans before they're at risk, within caps you set. It runs from a trading wallet your passkey owns, only for wallets you've listed and proved are yours, and every rescue it makes is written to your history.
Questions
- What health factor is safe?
- There's no single safe number. Aave says so itself: it depends on how volatile your collateral is and how closely it moves with your debt. A stablecoin borrowed against a stablecoin can run closer to 1 than a stablecoin borrowed against ETH. Work out what fall your loan can survive, and keep that buffer.
- How much do I lose in a liquidation?
- A liquidator repays part or all of your debt and takes the same value of your collateral plus a liquidation bonus. On Aave, up to half the debt can go at once while the health factor is above 0.95, and all of it below that or for small positions. The bonus is the cost.
- Does Burokku hold my keys to protect my loans?
- No. Alerts only read. Repaying or adding collateral is signed in your own wallet. The liquidation guard runs from a trading wallet your passkey owns, under rules only your passkey can change, and only for the wallets you've listed.