Calculate a Liquidation Buffer
Estimate whether a DeFi borrowing position has enough buffer before liquidation risk becomes urgent.
Mei supplies $10,000 of ETH with an 80% liquidation threshold and borrows $5,000 stablecoins. Health factor = collateral value times liquidation threshold divided by borrowed value The common trap is reading "position open" as "position safe." A protocol may allow a borrow that is fragile under ordinary volatility. If the borrower does not know the danger price, the first real warning may be a liquidation bot acting faster than the borrower can respond. Current threshold value $10,000 collateral times 80% threshold = $8,000 risk-adjusted collateral. This is not the amount to borrow safely. It is the protocol threshold input. Current…
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