The maths behind every number
Every formula the console uses, with real vault numbers.
Health factor
Collateral counts up to its liquidation threshold, then is compared with the debt.
Health factor = Σ (collateral value × liquidation threshold) ÷ debt
Safe from 1.25 · at risk from 1.00 · liquidatable below 1.00.
Show the worked example
Worked example: vault #1024
- Collateral
- 6 tETH × $3,200 = $19,200
- Counts toward solvency
- $19,200 × 83% = $15,936
- Debt
- 9,800 tUSDC = $9,800
- Health factor
- 15,936 ÷ 9,800 = 1.63
Liquidation price
The oracle price at which the health factor hits exactly 1.00.
Liquidation price = (debt − other collateral × their thresholds) ÷ (amount × threshold)
Show the worked example
Vault #1024: 9,800 ÷ (6 × 83%) = $1,967.87 per tETH, 38.5% below $3,200.
If other assets alone cover the debt, the console shows "Not reachable".
Interest over time
Debt compounds daily, so time alone lowers a vault's health.
Debt after n days = debt × (1 + APR ÷ 365)ⁿ
Show the worked example
9,800 tUSDC at 5.40% for 30 days becomes 9,843.59 tUSDC.
Liquidations
Below 1.00, anyone can repay part of the debt and receive collateral plus a bonus.
- Close factor
- Up to 50% of the debt
- Liquidation bonus
- tETH 5% · tWBTC 6.5% · tLINK 10%
- Seized collateral
- Repaid × (1 + bonus) ÷ collateral price
Show a worked receipt
Worked receipt: vault #1028 after tETH falls 10%
- Health factor before
- 0.95
- Liquidator repays
- 6,600 tUSDC
- Seizes
- 500.69 tLINK ($7,260.00)
- Bonus
- $660.00 (10%)
- Health factor after
- 1.12
- Covers the debt repaid
- $6,600.00
- Liquidator bonus
- $660.00
The vault lands at 1.12: still at risk, so another liquidation may follow.
Risk parameters
Riskier assets borrow less and pay liquidators more.
| Asset | Max LTV | Liquidation threshold | Liquidation bonus |
|---|---|---|---|
| tETH | 75.00% | 83.00% | 5.00% |
| tWBTC | 70.00% | 78.00% | 6.50% |
| tLINK | 60.00% | 70.00% | 10.00% |
Max LTV (loan-to-value) sits below the threshold, so a new loan is never liquidatable.
Borrow APR: tUSDC 5.40%, tDAI 4.85%.
Governance and the timelock
A change waits 48 hours, so owners can react before it applies.
- Propose
- Queued · 48 h timelock
- Execute
- Every vault re-rated
Glossary
- Vault
- Collateral locked by one owner, plus its debt.
- Collateral
- Tokens locked to secure a loan.
- Oracle
- The price feed the protocol trusts.
- Overcollateralization
- Borrowing less than the collateral is worth.
- Bad debt
- Debt no collateral covers any more.
- Timelock
- A delay between approving and applying a change.
