Comment on page

# Account Health

Every account's health is represented as a

**health factor**. Your account health factor is a single value that encapsulates how well-collateralized your portfolio is - or, how healthy it is.Account health is calculated with the following formula:

$A = \frac{assets_{weighted} - liabilities_{weighted}}{assets_{weighted}}$

Account health is typically between 0% and 100%, but can technically go as low as -∞.

**When your account health reaches 0% or below, you are exposed to liquidation.**

NOTE:weightedassets and liabilities are used in account health calculations. They're explained below.

When you lend an asset on marginfi, there are a few values to keep in mind when pricing the value of your collateral:

- Every asset has a
**market USD price**, as determined by its oracle. - Every asset has a
**confidence band-adjusted market USD price**, as determined by the*bottom**limit*of the price oracle's 95% confidence band. - Every asset has a
**weighted price**, which is the*confidence band-adjusted market USD price*multiplied by the asset's*deposit weight*.

Here's an example:

- Let's say a price oracle supplies a market USD price for SOL of
**$25**. - The price oracle's 95% confidence band is +/- $1, i.e. $24-26. The
*bottom limit*of this confidence band is $24, so the confidence band-adjusted market USD price is**$24**. - Let's say the SOL asset weight on marginfi is 90%. We multiply the
*confidence band-adjusted market USD price*by the asset weight, or $24 * 90%. **After all adjustments, SOL is priced at $21.60 as collateral.**

This multi-step approach to asset pricing allows marginfi to conservatively value assets, robust to multiple volatility and price manipulation angles.

Similarly to assets, liabilities on marginfi are adjusted:

- Every liability has a
**market USD price**, as determined by its oracle. This market USD price is the same market USD price as a given token would have when being lent. - Every liability has a
**confidence band-adjusted market USD price**, as determined by the*top**limit*of the price oracle's 95% confidence band. - Every liability has a
**weighted price**, which is the*confidence band-adjusted market USD price*multiplied by the liability's*borrow weight*.

Here's an example:

- Let's say a price oracle supplies a market USD price for SOL of
**$25**. - The price oracle's 95% confidence band is +/- $1, i.e. $24-26. The
*top limit*of this confidence band is $26, so the confidence band-adjusted market USD price is**$26**. - Let's say the SOL LTV on marginfi is 80%. We multiply the
*confidence band-adjusted market USD price*by$\frac{1}{LTV}$. In this case,$\frac{1}{0.80} = 1.25$. **After all adjustments, SOL is priced at $32.50 when borrowed.**

Notice that SOL is valued differently at a given price depending on whether it's an asset or a liability.

**At a market price of $25 (and assuming the configured parameters above), SOL is valued at $21.60 as an asset and $32.50 as a liability.**

Last modified 4mo ago