“A health factor below 1 can trigger liquidation”—a statement backed by Aave’s rules cannot be applied directly to EVAA, which surged today.
As of 11:07 Beijing time on October 28, Binance’s EVAAUSDT perpetual had risen 91.3% over the past 24 hours.
The formula in Aave’s official documentation can be simplified to H = C ÷ D; a value below 1 indicates liquidation risk. But EVAA’s liquidation documentation gives the formula as H = 1 - D ÷ C. H is the health factor, and D is the debt value. In Aave, C is adjusted according to the liquidation threshold; in EVAA, it is adjusted according to the collateral factor. In each protocol, it represents the collateral amount under that protocol’s rules.
Looking only at the formulas, when D equals C in each case, Aave’s health factor is 1, while EVAA’s is 0. EVAA’s documentation also states that if the health factor does not return to a positive value after liquidation, another liquidation will occur.
This comparison is between the scales used in the documentation. The specifics of an account also depend on its collateral assets, debt, and the parameters in effect at the time. Ranking the health factors of two protocols side by side does not tell you which is safer: the names are the same, but the scores may not be comparable.
$EVAA #LendingRisk
As of 11:07 Beijing time on October 28, Binance’s EVAAUSDT perpetual had risen 91.3% over the past 24 hours.
The formula in Aave’s official documentation can be simplified to H = C ÷ D; a value below 1 indicates liquidation risk. But EVAA’s liquidation documentation gives the formula as H = 1 - D ÷ C. H is the health factor, and D is the debt value. In Aave, C is adjusted according to the liquidation threshold; in EVAA, it is adjusted according to the collateral factor. In each protocol, it represents the collateral amount under that protocol’s rules.
Looking only at the formulas, when D equals C in each case, Aave’s health factor is 1, while EVAA’s is 0. EVAA’s documentation also states that if the health factor does not return to a positive value after liquidation, another liquidation will occur.
This comparison is between the scales used in the documentation. The specifics of an account also depend on its collateral assets, debt, and the parameters in effect at the time. Ranking the health factors of two protocols side by side does not tell you which is safer: the names are the same, but the scores may not be comparable.
$EVAA #LendingRisk