In decentralized lending protocols (Aave, Compound, MakerDAO), a loan's Health Factor measures collateral adequacy against debt. When Health Factor drops below 1.0, smart contracts automatically execute collateral liquidations, charging penalty fees (5-15%). The Liquidation Price equation is: Debt / (Collateral Amount × Liquidation Threshold).
DeFi Liquidation & Health Factor Calculator
Model loan-to-value (LTV) exposure, liquidation margins, and collateral drawdown risk under severe volatility.
DeFi Flash Loan Vulnerabilities and Cascading Liquidations
Oracles relying solely on DEX spot pools rather than volume-weighted Time-Weighted Average Price (TWAP) or Chainlink feeds remain vulnerable to price manipulation attacks. Maintaining a Health Factor above 1.8 is critical during macro volatility cascades to prevent MEV liquidation bots from front-running collateral salvage transactions.