Health Factor is a metric used to assess the stability and risk level of a user’s position in decentralized finance (DeFi) platforms, particularly those that facilitate lending and borrowing. It measures the ratio of the value of a user’s collateral to the value of the borrowed assets.A high Health Factor indicates that there is a significant cushion between the collateral and the borrowed amount, suggesting lower risk of liquidation. When the Health Factor drops too low, it implies that the collateral is insufficient to cover the borrowed amount, increasing the risk that the assets may be liquidated to repay the loan.Different platforms may have varying thresholds for a healthy Health Factor, but a common benchmark is a Health Factor above 1. In this case, the user’s collateral sufficiently covers their debt. Monitoring this metric is crucial for users to avoid unwanted liquidation, ensuring safer engagement with lending and borrowing services. In summary, Health Factor is a key indicator of financial health and risk management in DeFi transactions.