> For the complete documentation index, see [llms.txt](https://permapod.gitbook.io/home/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://permapod.gitbook.io/home/tutorial/health-factor.md).

# Health Factor & Liquidation

Your Health Factor is the most important indicator in Permapod. It tells you how safe your position is. Understanding it is essential to avoid losing funds.

***

#### What Is Health Factor?

The Health Factor is a single number that represents the safety of your combined position (all supplies and borrows).

| Health Factor | Status            | Meaning                                     |
| ------------- | ----------------- | ------------------------------------------- |
| **> 3.0**     | Safe (green)      | Comfortable margin — low liquidation risk   |
| **1.5 – 3.0** | Moderate (yellow) | Getting closer — monitor your position      |
| **1.0 – 1.5** | Danger (red)      | High risk — take action to improve          |
| **< 1.0**     | Liquidation       | Your collateral can be seized to repay debt |

***

#### Where to Find It

Your Health Factor is displayed in two places:

1. **Dashboard top panel** — Always visible when you have active positions.
2. **Transaction** — Shown when you supply, borrow, withdraw, or repay. It updates in real time as you enter amounts.

In the Dashboard below, the Health Factor shows **3.58** in green — a comfortable safety margin.<br>

<figure><img src="/files/Np8DSsALXDnPJX85dKd3" alt=""><figcaption><p>Health Factor of 3.57 (green) highlighted in the top panel</p></figcaption></figure>

***

#### What Causes It to Change?

| Action                      | Effect on Health Factor |
| --------------------------- | ----------------------- |
| Supply more collateral      | Increases (safer)       |
| Repay debt                  | Increases (safer)       |
| Borrow more                 | Decreases (riskier)     |
| Withdraw collateral         | Decreases (riskier)     |
| Collateral price drops      | Decreases (riskier)     |
| Collateral price rises      | Increases (safer)       |
| Borrowed assets price drops | Increases (safer)       |
| Borrowed assets price rises | Decreases (riskier)     |

***

#### What Is Liquidation?

When your Health Factor drops **below 1.0**, your position becomes eligible for **liquidation**. This means:

* A third-party liquidator can repay part of your debt.
* In exchange, they receive a portion of your collateral **plus a bonus** (the Liquidation Bonus).
* You lose collateral, but your debt is reduced.

{% hint style="danger" %}
Liquidation is **automatic and irreversible**. You cannot cancel it once triggered.
{% endhint %}

***

#### How to Avoid Liquidation

1. **Keep your Health Factor above 2.0** as a safety margin.
2. **Monitor regularly** — prices move, and so does your Health Factor.
3. **Repay debt** if your Health Factor is declining.
4. **Supply more collateral** to increase your buffer.
5. **Don't borrow the maximum** — leave room for price volatility.

***

#### Risk Simulation

Permapod includes an interactive **Risk Simulation** as part of the onboarding tour. It lets you experiment with:

* **Collateral Value** slider — simulate your deposit amount.
* **Borrow Amount** slider — simulate how much you borrow.
* Real-time **LTV**, **Health Factor**, and **Risk Level** calculations.

This helps you understand the relationship between collateral, debt, and risk before committing real funds.

{% hint style="info" %}
If you skipped the onboarding tour, you can restart it — see [Settings](/home/tutorial/settings/settings.md) for instructions.
{% endhint %}

***

#### Key Terms

| Term                       | Definition                                                          |
| -------------------------- | ------------------------------------------------------------------- |
| **LTV (Loan-to-Value)**    | Your debt value divided by your collateral value. Higher = riskier. |
| **LLTV (Liquidation LTV)** | The LTV threshold that triggers liquidation.                        |

You can find each asset's LTV parameters on its [Reserve Overview](/home/tutorial/markets.md) page.

{% hint style="success" %}
**Next step:** [Settings](/home/tutorial/settings/settings.md) to customize your experience.
{% endhint %}


---

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