Calculate the liquidation-adjusted ratio
Health factor equals collateral value multiplied by the weighted liquidation threshold, divided by debt value. Enter an 80% threshold as 80 in a percentage field; the calculation uses 0.80. For multiple collateral assets, weight each asset's threshold by its collateral value. A simple average of thresholds works only when the collateral values are equal. The ratio has no currency unit because numerator and denominator use matching valuation units.
Work through a hypothetical position
Suppose collateral is worth $15,000, the weighted threshold is 80%, and debt is $8,000. Adjusted collateral is $12,000, producing a health factor of 1.50. If collateral value falls to $12,000 while debt stays fixed, the ratio becomes 1.20. A value of $10,000 produces 1.00. These examples isolate collateral-price sensitivity; changing the debt asset's value at the same time can materially alter the result.
Interpret the boundary and missing inputs
Aave describes a health factor below 1 as a liquidation condition. The calculator does not model liquidation execution, liquidation bonuses, account-specific modes, or changes to governance parameters. Accrued interest can increase debt between observations. With zero debt, division is undefined and there is no finite borrowing ratio to report. A ratio above 1 describes the entered snapshot; it does not determine a universally safe operating buffer.