# LTV, Health Factor and Safety Zones

> Three numbers tell you how safe a position is. The app shows all three for every position. How much you owe against what your collateral is worth

Canonical: https://spout.finance/docs/health-factor/

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Three numbers tell you how safe a position is. The app shows all three for every position.

## The formulas

`LTV = Loan ÷ (tokens × price)`

How much you owe against what your collateral is worth

`Health factor = Liquidation threshold ÷ LTV`

Above 1.00, the position cannot be liquidated; below 1.00, liquidation starts

`Liquidation price = Loan ÷ (tokens × liquidation threshold)`

The price at which liquidation starts

How much more you can borrow now

## A worked example

You hold 50 NVDA tokens at $200 ($10,000), with NVDA's 58.8% liquidation threshold, and you borrow $3,000.

**LTV**: $3,000 ÷ $10,000 = 30%.

**Health factor**: 58.8% ÷ 30% = 1.96.

**Liquidation price**: $3,000 ÷ (50 × 0.588) = about $102.04, a fall of about 49%.

**Room to borrow**: 50% of $10,000, minus $3,000, is $2,000.

## Safety zones in the app

| Zone | LTV |
| --- | --- |
| Safe | Up to 35% |
| Warning | Above 35%, up to 45% |
| Danger | Above 45% |

The LTV zones are the same for every asset. Next to them, the app colours your health factor: green at 1.80 and above, amber from 1.25 up to 1.80, and red below 1.25. Because the health factor also reflects your asset's threshold, the two can differ: the same LTV gives a higher health factor on MSTR (62.5%) than on GLD (54.1%), but MSTR also moves far more, so that extra room can disappear faster. On the steadiest assets, the danger zone sits close to the threshold.

## What moves your numbers

**The stock price**: A fall raises your LTV; a rise lowers it.

**Borrowing more or repaying**: Borrowing raises LTV; repaying lowers it.

**Adding or withdrawing collateral**: Adding lowers LTV; withdrawing raises it.

**An assignment**: It reduces your token count but happens only after a rally, so your LTV usually ends lower than before the rally. Check it after any assignment.