Health Ratio

Why we need Health ratio?

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.

Health Ratio Measurement

• 1.2 -1.3: Extremely Risky

• 1.3 - 1.4: Risky

• 1.4 - 1.5: Normal

• 1.5 - 3: Good

• >3: Very Good