What Is My Liquidation Price?

Your liquidation price is the price at which your collateral stops covering your loan, and someone else is allowed to repay part of your debt and take that collateral. It is the health factor expressed as a single number on a chart. On Aave the app shows it next to each borrowed asset. On a leveraged trade, an exchange shows it next to the position.

How do I work it out myself?

Take your debt, divide it by the liquidation threshold of your collateral, then divide by how many coins you deposited. Say you supply 5 ETH, the threshold on ETH is 80%, and you borrow $8,000 of USDC. That is 8,000 divided by 0.8, which is $10,000 of collateral needed, spread over 5 ETH - so your liquidation price is $2,000 per ETH. Above that you are safe, at it you are not. It is worth doing the sum once by hand, because it makes clear that the level depends on your own borrowing, not on anything the market decides.

Why does the number keep moving?

It is a line in sand, not stone. Interest on your debt pushes the level up a little every day. Repaying part of the loan pushes it down, and so does adding collateral. If you have several collateral assets, each price feeds in, so a drop in one can shift the level for all of them. On a borrow against a stablecoin pair the line barely moves. On a volatile token it can travel a long way in a week.

Which price actually counts?

Not the one on your favourite chart. Aave uses price oracles - feeds run by networks such as Chainlink that gather prices from many venues - and that feed is what triggers a liquidation. A brief wick on one exchange usually will not do it, but a real move across the market will.

Find your liquidation price today and keep it next to your position, then set an alert about 15% above it rather than on the level itself, because by the time the price arrives the bots are already there. How the health factor works explains where the threshold figure comes from, and how to avoid getting liquidated covers what to do with the warning you have given yourself.