Health Factor
The health factor is the numeric representation of the safety of your deposited NFTs against the borrowed assets and their underlying value. The higher the value is, the safer your NFTs are against a liquidation scenario.If the health factor reaches 1, your collateral will be flagged for liquidation. A Health Factor below 1 can be liquidated. The health factor depends on the liquidation threshold of your collateral against the value of your borrowed funds.
In the application, the health factor will be colored. If your health factor is green then you are far from liquidation, if the health factor is yellow then you are approaching liquidation and if your health factor is red you are very close to liquidation or you are already at risk liquidation. As a general rule, always keep your health factor above 1 to avoid liquidation.
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