Continuum Logocontinuum
Trading

What Is Health Factor?

A metric indicating how close a leveraged position is to liquidation.

Definition

Health factor measures the safety of a collateralized position. Above 1.0 is safe; below 1.0 triggers liquidation. Higher health factors mean more buffer before liquidation.

How It Works

Health Factor = (Collateral Value × Liquidation Threshold) / Debt Value. As collateral value falls or debt increases, health factor drops. Falling below 1.0 allows liquidators to close your position.

In Continuum

When using Continuum L tokens as collateral on lending protocols, monitor your health factor carefully. Market volatility can quickly reduce your buffer. Aim for 1.5+ for safety.

Related Terms

Liquidation

Forced closure of a position when collateral value falls below required levels.

Collateral

Assets deposited to back or secure a financial position.

Leverage

Using borrowed capital to amplify the potential returns (and risks) of a position.

More Trading Terms

LiquidationLeverageFunding RatePerpetual Futures (Perps)

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