Health, Safety and Collateral Ratio

The Health Ratio is Aave's indicator of the position's overall health. Once it reaches 1, the position is liquidated.

It's calculated as:

Health Ratio = (collateral value * liquidation factor) / debt value

So if we take the example from the screenshot below, we'd have:

Health Ratio = (19,337 * 0.83) / 9,998.70

Health Ratio = 1.60

The Collateral Ratio represents the % difference between your collateral and your debt in dollar amounts. It's calculated as:

Collateral Ratio = (collateral dollar amount / debt amount) * 100

So if we take the example from the screenshot below, we'd have:

Collateral Ratio = ($84,690/ $42,992) * 100

Collateral Ratio = 196.98%

The Safety Ratio is a measure of how far you are from liquidation, expressed as a percentage. It is inversely proportional to your borrow power used, so the more you borrow, the lower your Safety Ratio. It's calculated as:

Safety Ratio = (( Collateral in dollar value * collateral factor) / debt amount in dollar value) * 100

So if we take the example from the screenshot below, we'd have:

Safety Ratio = (( $78,979 * 0.8) / 35,002) * 100

Safety Ratio = 181.63%