Health Factor

The health factor is way borrowers can manage the risk of their loans, inspired by Aave's health factor system, Cryndex will take the sum of all collateral supplied divided by the amount of debt minted. The health factor can be calculated using the equation below:

$$\begin{equation} \text{Health Factor} = \frac{\sum_{i} (\text{Collateral Value}_i \times \text{Liquidation Threshold}_i)}{\sum_{j}\text{Debt Value}} \end{equation}$$

When a borrower's health factor drops below 1, anyone else on the network can liquidate the borrowers by seizing their collateral at a 1:1 ratio plus the liquidation bonus of the collateral.