The Health Factor represents how “safe” your leverage portfolio is, defined as the risk-adjusted proportion of collateral deposited divided by the borrowed risk-adjusted amount.
The Account Health is calculated from the user's collateral balance multiplied by each asset's adjust factor, divided by the user's debt, which is also divided by this adjust factor.
Example: if you have 1000 USDC set as collateral and you made purchases for a total of 500 USDC, your health factor will be:
(1000*0.91)/(500/0.91) = 1.65
You can find the Adjust factor of each currency in this link.
If your Account health goes below 1, it means that you are in a position where a liquidator can pay part of your debt and keep part of your collateral with a discount, but don’t worry, to help you not get liquidated, we have taken several decisions:
You won’t be able to make a purchase that makes you take a loan and take your HF below 1.1, so you never risk being liquidated by making a purchase.
the protocol has a Dynamic Close Factor (based on the user’s degree of insolvency), which is the proportion of outstanding borrows that must be repaid to return a user to a solvency situation.