What Is a Good Health Factor on Aave?

There is no official answer, but there is a practical one. On Aave, a good health factor for most people is 2 or higher. That means your collateral could roughly halve in value before a liquidator could touch it. Anything from 1.0 to 1.2 is not a safe position, it is a position waiting for a bad hour, and plenty of loans have been closed overnight from exactly that range.

Why isn't 1.1 good enough?

Because the number is tied to prices that move while you sleep. A health factor of 1.1 on an ETH-backed loan means a fall of roughly 9% wipes out your cushion, and ETH has moved that much in an afternoon many times. Liquidation bots do not wait for business hours, and they do not care that you would have repaid in the morning. Treat the gap above 1 as how long you have to react, not as spare room you are wasting.

Does it depend on what I deposited?

Very much. Two coins that both aim to hold a dollar, say USDC supplied against borrowed USDT, barely move against each other, so a health factor of 1.5 is calm there. ETH or BTC as backing for a stablecoin loan swings far more, and 2 is a sensible floor. A small, volatile token as collateral deserves 3 or more, if you use it at all, because a thin market can gap through your level before anyone can act.

How do I pick my own level?

Work backwards from a fall you could live through. Decide the worst drop you want to survive - 40% is a fair stress test for ETH - and set your borrowing so that drop still leaves you above 1. The Aave app recalculates the health factor as you type an amount, so you can see the result before you confirm anything.

Whatever number you choose, write it down and check the position monthly, because interest alone will erode it. If you prefer a concrete trigger to a target, your liquidation price converts the same idea into a single price level, and how the health factor works explains the maths behind both.