Health Factor
Your Health Factor
To manage risks effectively, Kinetic advises users to monitor their loan's health factors closely. Borrowers should be proactive in managing their positions and consider repaying or depositing additional assets if their health factor declines. Staying informed about blockchain developments and the assets used as collateral can help users make informed decisions.
How Health Factor is Calculated
The Health Factor (HF) measures how safe a user's borrowed funds are compared to their supplied collateral. The formula is:

Important: Each asset has a Collateral Factor, meaning only a percentage of its value counts toward your borrowing power.
Example Calculation:
Collateral Factor:
sFLR: 70%
USDC: 80%
User Supplied Assets:
sFLR: $2,000
USDC: $1,500
Total Collateral: $3,500
Borrow Limit Calculation:

User’s Actual Borrow: $1,500
Health Factor Calculation:

If a user's Health Factor drops to 1, they risk liquidation. In this example, that happens when their borrow amount reaches $2,600.
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