The Health Ratio is crucial for the safety and stability of borrowing on EnsoFi. It measures the risk of a borrower's position based on their collateral.
What is Health ratio?
Borrowing is secured by users' deposited assets, requiring over-collateralization for all positions. The Health ratio, a composite of individual collateral ratios, reflects the overall risk of a position.
This is how we calculate the Health Ratio:
Formula:
Health Ratio = Collateral (USD) / Borrow Amount (USD)
For example:
If you borrow $100 with collateral worth $150 → Health Ratio = 150/100 = 1.5
The Health Ratio is monitored in Real Time.
If it goes below 1.2, there will be a liquidation event. You can only take a loan when the heath ratio is higher than or equal to 1.5.
