> For the complete documentation index, see [llms.txt](https://docs.rootfinance.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rootfinance.xyz/health-bar.md).

# 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.