LTV, LLTV, and health factor explained
Loan-to-value (LTV), liquidation LTV (LLTV), and health factor decide how much you can borrow and when a position is at risk. A plain-English guide.
When you borrow against collateral, three numbers matter: how much you're borrowing relative to your collateral (LTV), the level at which you'd be liquidated (LLTV), and a single safety score (health factor).
Loan-to-value (LTV)
LTV is your loan divided by your collateral's value. Borrow $50 against $100 of collateral and your LTV is 50%. The higher the LTV, the closer you are to the danger zone.
Liquidation LTV (LLTV)
Each market sets a maximum LTV called the LLTV, for example 86%. If your LTV rises to the LLTV (because your collateral fell or your debt grew with interest), your position can be liquidated to repay the loan.
Health factor
Health factor rolls this into one number: roughly your collateral value times the LLTV, divided by your debt. Above 1.0 is safe; at 1.0 you're at the liquidation threshold. Skope targets a comfortable margin (around 2.0) by default.
Frequently asked questions
- What health factor is safe?
- Higher is safer. 1.0 means you're at the liquidation threshold; a buffer well above 1.0 leaves room for price swings. There is no risk-free level.
Borrowing is over-collateralized and carries risk: if your collateral's value falls, your position can be liquidated. Rates shown are variable and update with the market. Skope is non-custodial and never holds your funds. This page is for general information only and is not financial, investment, tax, or legal advice.