# Health Bar

The Root Finance Health Bar is an innovative tool that provides a graphic summary of a user's lending and borrowing position, helping them intuitively manage their strategies. \
\&#xNAN;*<mark style="color:red;">Remember:</mark> <mark style="color:red;"></mark><mark style="color:red;">**Once you start seeing red, it's time to add collateral or pay back!**</mark>*<mark style="color:red;">**&#x20;**</mark><mark style="color:red;">**; )**</mark>

**HOW TO INTERPRET THE HEALTH BAR**

First of all, it’s important to note that the Root Health Bar is a visual tool and should not be solely relied upon to manage or analyze your lending and borrowing position.

There are 3 key aspects to understand in order to read the Health Bar correctly:

1. **Borrow Power Used**: This indicates how much of your borrowing capacity is available, considering your lending and borrowing position, and is displayed as a percentage. The more loans you take against your collateral, the more Borrow Power you will use. You can borrow up to 100% of your Borrow Power, which means you have reached your Borrow Limit.
2. **Your Borrow Limit**: This is the maximum amount in USD that you can borrow against your collateral. Once you reach this limit, you can no longer open new borrowing positions.
3. **Liquidation Threshold**: This parameter indicates the point at which you are at risk of liquidation. If your Borrow Power exceeds 100%, you can no longer take out loans, but you are not immediately liquidated. Instead, there is a **buffer** before reaching the liquidation point. This buffer, or liquidation threshold, varies depending on the assets used as collateral.\ <br>

**SCENARIOS**\
\
\
&#x20;                          <mark style="color:green;"></mark><mark style="color:green;">**HEALTHY POSITION**</mark>**&#x20;&#x20;**&#x20;                                                  &#x20;**&#x20;    &#x20;**<mark style="color:red;">**ALMOST LIQUIDATED**</mark>

<div><figure><img src="/files/SuoBmKXatEywBDq9aG7X" alt=""><figcaption></figcaption></figure> <figure><img src="/files/6dB72Z2dGnZIkATuIKvz" alt=""><figcaption></figcaption></figure></div>

### **How to Calculate Your Liquidation Threshold and Borrow Limit**

To better understand the Health Bar, it’s essential to know how to calculate two crucial values: your **Liquidation Threshold** and your **Borrow Limit**. Both depend on the Loan-to-Value (LTV) ratios of the assets you've supplied as collateral.

#### **1. Calculating Your Liquidation Threshold**

The **Liquidation Threshold** indicates the percentage at which you risk liquidation, and it is always slightly higher than your **Borrow Power Used**. The buffer that separates the **Borrow Power** from the **Liquidation Threshold** is usually **5%** more than the maximum LTV of your collateral assets.

For example, if an asset has an LTV of **60%**, the Liquidation Threshold will be **65%**. The formula to calculate the overall **Liquidation Threshold** across multiple assets is:\
\
\&#xNAN;***Liquidation Threshold = (Sum of (Asset Value\_i \* (LTV\_i + 0.05))) / (Sum of (Asset Value\_i \* LTV\_i))***\
\
Where:

* **Asset Value\_i** = the value of each asset in USD.
* **LTV\_i** = the Loan-to-Value of each asset.

**Example Calculation**:

* **HUG**: With an LTV of 25% and a Liquidation Threshold of 30%, the Liquidation Threshold on the Health Bar will be 12&#x30;**%**.

#### **2. Calculating Your Borrow Limit**

Your **Borrow Limit** represents the maximum amount you can borrow based on the value of the assets you’ve supplied as collateral. The **Borrow Limit** is calculated using the weighted average of the LTV of your supplied assets:\
\
\&#xNAN;***Borrow Limit = Sum of (Asset Value\_i \* LTV\_i) / Total Asset Value***

Where:

* **Asset Value\_i** = the value of each asset in USD.
* **LTV\_i** = the Loan-to-Value of each asset.
* **Total Asset Value** = the total value of all supplied collateral.

Once you reach **100% Borrow Power**, you have reached your Borrow Limit, meaning no further borrowing is allowed unless additional collateral is supplied. The bar will begin to show red as you approach this limit.


---

# 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.rootfinance.xyz/health-bar.md?ask=<question>
```

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.