# Risk Metrics ### **Health Factor** The Health Factor (HF) is a critical metric that measures the safety of a user’s borrow position in Pike. It is directly tied to the Liquidation Loan-To-Value (LLTV) factor. When the health factor falls below 1, the user’s position is at risk of liquidation. `Health Factor = (Total Collateral Value * Weighted Average LLTV) / Total Borrow Value` A health factor above 1 indicates a safer position, while a health factor below 1 may trigger liquidation. Monitoring the health factor regularly is essential, as it fluctuates with changes in both collateral and borrowed asset values. To improve the health factor, users can supply more collateral or repay part of their borrowed assets. ### **Loan-to-Value (LTV)** The Loan-to-Value ratio plays important role in the Pike as it determines the maximum borrowing capacity of an asset as a percentage of the supplied collateral asset. Put simply, the LTV ratio indicates how much one can borrow based on the value of the asset pledged as collateral. For example, if an asset has an LTV of 80%, supplying $100 worth of this asset allows the user to borrow up to $80. ### **Liquidation Loan-To-Value (LLTV)** The LLTV is the threshold at which a user’s position becomes eligible for liquidation. The LLTV is higher than the LTV, creating a safety buffer. If a user’s borrowing exceeds this threshold, liquidation occurs to restore balance. ### **Liquidation Penalty** When liquidation occurs, a liquidation penalty is applied to the collateral sold. This penalty incentivizes liquidators to act and ensures the protocol remains healthy. ### **Close Factor** The Close Factor determines the maximum portion of a liquidatable position that can be repaid in a single liquidation event. It prevents full liquidation of an account at once, helps maintain fairness and ensures the borrower has the opportunity to recover their position. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.pike.finance/introduction/key-metrics-and-parameters/risk-metrics.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.