Liquidation Calculator

On-chain lending protocols like Aave, Morpho, and Euler let you deposit collateral and borrow against it. To protect lenders, every loan must stay overcollateralized, meaning your collateral is always worth more than your debt by a defined margin. Liquidation is the protocol's safety mechanism. When your collateral value falls too close to your debt, the protocol allows third parties to repay part of your loan and seize your collateral in return.

Liquidation is not a penalty for borrowing. It is the automatic enforcement of the margin rule that keeps the protocol solvent. It usually happens because the price of your collateral dropped, your borrowed asset rose in value, or interest quietly accrued on your debt over time. The result is the same. You lose a slice of your collateral plus a penalty, and you keep the borrowed funds.

This liquidation calculator turns your position into three clear numbers. It computes your health factor, the buffer you have before liquidation expressed as a percentage drop in collateral price, and your estimated liquidation price. Together these tell you how safe your position is right now and how much room the market can move against you before you are at risk.

It is built for Aave, Morpho, and Euler style positions, the most common overcollateralized lending markets on EVM chains. You enter your collateral value, your debt, the liquidation threshold of your collateral asset, and the current collateral price. The calculator does the rest, so you can stress test a position before you open it or sanity check one you already hold.

The health factor is a single number that summarizes how safe your borrowing position is. It is the canonical safety signal across Aave, Morpho, and Euler. A health factor above 1 means your position is solvent. A health factor at or below 1 means your position can be liquidated.

The formula is straightforward. Health factor equals collateral value multiplied by the liquidation threshold, divided by total debt. If you supply 10,000 dollars of ETH with an 80 percent liquidation threshold and borrow 4,000 dollars, your health factor is (10,000 times 0.80) divided by 4,000, which equals 2.0.

The further above 1 your health factor sits, the more price movement your position can absorb. A health factor of 2.0 is comfortable. A health factor of 1.1 is fragile and can flip into liquidation on a small market move or a few days of accrued interest.

Your liquidation price is the collateral price at which your health factor reaches exactly 1. Below that price, the protocol can liquidate you. The calculator finds it by solving the health factor formula for the collateral price.

For a single collateral position, the liquidation price equals your debt divided by the product of your collateral quantity and the liquidation threshold. Using the example above, with one collateral asset, the drop buffer tells you how far the current price can fall before reaching that level. If your collateral can drop 50 percent before liquidation, you have a healthy cushion. If it can only drop 5 percent, any normal volatility could trigger it.

Each input maps to a real part of your position. Read them carefully, because small errors change the output a lot.

• Collateral value: the current market value of all assets you have supplied as collateral.
• Debt: the current value of everything you have borrowed, including interest accrued so far.
• Liquidation threshold: the protocol parameter for your collateral asset, expressed as a percentage, such as 80 percent for ETH on many markets.
• Collateral price: the current price of your collateral asset, used to compute the drop buffer and liquidation price.
• Drop buffer: the percentage your collateral price can fall before your health factor hits 1.

On the results side, treat the health factor as your headline safety number and the drop buffer as your intuition check. A high health factor with a wide drop buffer means you can relax. A liquidation price sitting just under the current price means you should act.

Two parameters often get confused. The maximum loan to value (LTV) is how much you are allowed to borrow against an asset at the moment you open the loan. The liquidation threshold is the higher level at which the protocol liquidates you. The gap between them is your safety margin.

For example, ETH might have a max LTV around 75 percent and a liquidation threshold around 80 percent. That means you can borrow up to 75 percent of your ETH value, but you are only liquidated once your debt reaches 80 percent of collateral value. Stablecoins often carry higher thresholds, while volatile or thinly traded assets carry lower ones.

• Major assets like ETH and wstETH: liquidation thresholds often around 80 percent.
• Blue chip stablecoins: thresholds frequently in the mid 80s to low 90s percent.
• Volatile or long tail assets: lower thresholds, sometimes 50 percent or less.
• Isolated and high risk markets: tighter parameters set per market by the protocol.

When your health factor falls to 1 or below, your position becomes eligible for liquidation. Independent actors called liquidators, usually bots, repay part of your debt on your behalf. In exchange, they receive an equivalent value of your collateral plus a liquidation bonus, also called the liquidation penalty.

That penalty is the cost you pay. It typically ranges from a few percent to around 10 percent or more depending on the asset and protocol. The liquidator profits from the discounted collateral, which is what incentivizes them to keep the protocol solvent. You keep the borrowed funds, but your collateral shrinks by the repaid amount plus the bonus, leaving you worse off than if you had managed the position yourself.

Staying safe is mostly about maintaining a comfortable margin and reacting before the market does. Pick a target health factor and defend it rather than borrowing the maximum the protocol allows.

• Target a health factor with real margin, such as 1.5 to 2.0 for volatile collateral, higher in fast markets.
• Add collateral to raise your health factor when prices fall.
• Repay part of your debt to reduce the denominator and move your liquidation price further away.
• Prefer correlated or stable collateral against stable debt to reduce price gap risk.
• Account for borrow interest, which slowly increases your debt even when prices are flat.

The earlier you act, the cheaper it is. Once liquidation triggers, you pay the penalty. Before that, a small repayment or top up costs you nothing but gas.

The health factor concept is shared, but the risk architecture differs. On Aave, collateral and borrows often sit in a shared pool, so your health factor reflects your whole cross collateral position and uses one liquidation threshold per asset. Spark, built on Aave technology, follows the same model.

Morpho is built around isolated markets. Each market pairs one collateral asset with one loan asset and has its own liquidation loan to value parameter. Risk does not bleed between markets, which makes each position simpler to reason about but means you manage health per market rather than across one combined account.

Euler offers a flexible model with tunable risk parameters and configurable collateral relationships, including isolated and cross positions. Always check the specific liquidation threshold or liquidation LTV for the exact market you are in, since two markets on the same asset can carry very different parameters.

The most dangerous mistake is false safety from multiple collaterals. Holding several assets can make a position feel diversified, but a broad market selloff tends to drag correlated crypto assets down together. A multi collateral position can move toward liquidation faster than the per asset numbers suggest, and a single weighted health factor can hide which asset is dragging you down.

The second common error is ignoring borrow interest accrual. Your debt grows continuously as interest compounds, so a position that looks safe today can drift toward liquidation over weeks even if prices never move. Variable borrow rates can also spike when utilization rises, accelerating the drift.

• Assuming a healthy current price means a safe position, while ignoring volatility.
• Borrowing near the max LTV and leaving almost no buffer above a health factor of 1.
• Forgetting that a rising borrowed asset, not just falling collateral, can liquidate you.
• Not rechecking parameters after a protocol governance change to thresholds or caps.

Suppose you supply 5 ETH as collateral at a price of 3,000 dollars, giving 15,000 dollars of collateral. The liquidation threshold for ETH is 80 percent. You borrow 6,000 dollars of USDC.

Your health factor is (15,000 times 0.80) divided by 6,000, which equals 2.0. Your liquidation price is 6,000 divided by (5 times 0.80), which equals 1,500 dollars per ETH. That means ETH can fall from 3,000 to 1,500 before you are liquidated, a drop buffer of 50 percent.

Now imagine interest accrues and your debt grows to 8,000 dollars while ETH is unchanged. Your health factor falls to (15,000 times 0.80) divided by 8,000, which equals 1.5, and your liquidation price rises to 2,000 dollars per ETH. Nothing happened to the price, yet your buffer shrank. This is exactly the kind of silent drift that catches borrowers off guard.

A liquidation calculator is a snapshot. Real positions move every block as prices change and interest accrues. Otomato turns that snapshot into continuous monitoring. Paste a wallet address and Otomato automatically detects your lending positions across 11 chains, including Aave, Morpho, Euler, and Spark, with no manual setup and no signatures.

Otomato tracks your live health factor and watches the buffer between your current price and your liquidation price in real time. When your position approaches risk, it sends a precise, actionable alert to the Otomato app or Telegram, before liquidation, so you have time to add collateral or repay rather than discovering the loss afterward.

It also monitors the events around your position that calculators cannot capture, such as borrow rate spikes, collateral depegs, and protocol parameter changes that move your liquidation threshold. The result is a portfolio that monitors itself, so you only get interrupted when something genuinely deserves your attention.