Plain English
Health factor is the Aave-coined metric for “how safe is my loan.” Above 1.0 = safe. Below 1.0 = liquidatable. The further above 1.0, the more cushion you have. Most experienced users keep it above 2.0 as a comfort buffer against volatility.
How it actually works
Health factor = (collateral value × liquidation threshold) / borrowed value. As collateral rises, HF rises. As you borrow more or as collateral falls, HF falls. At exactly 1.0, your position is at the liquidation threshold. Below 1.0, liquidation bots compete to seize collateral.
What it means for you
For any open crypto loan, set HF alerts at 1.5 and 1.3 in your wallet or via a service like DeFiSaver. Acting at 1.5 (top up collateral, repay a slice) is operationally calm; acting at 1.05 is panic. The HNW playbook keeps HF >2.0 on size positions and never lets it drop below 1.5 without active intervention.
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Educational content only. Not investment, tax, or legal advice.