Collateral, LTV, and Liquidation on LayerBank When borrowing on LayerBank, the value of your collateral determines how much you can borrow and how safe your position remains. If your borrowed value rises too close to your collateral whether from price drops or interest accrual you enter the zone of liquidation risk Max Loan-to-Value (LTV) Max LTV represents the maximum portion of your collateral’s value that can be borrowed Max\ LTV = \frac{Borrow\ Limit}{Collateral\ Value} If USDC has an 80% Max LTV, supplying 100 USDC allows you to borrow up to 80 USDC For users supplying multiple assets, the Borrow Limit becomes a weighted calculation based on each asset’s value and Max LTV: Borrow\ Limit = \sum_i (Collateral_i \times Price_i \times MaxLTV_i) This ensures diversified portfolios receive an accurate and balanced risk evaluation Health Factor indicates the safety of your position: HF = \frac{Borrow\ Limit}{Borrowed\ Value} HF > 1.0 → Safe HF = 1.0 → At risk HF < 1.0 → Liquidation can occur If HF drops below 1.0, LayerBank triggers partial liquidation. A liquidator repays up to 50% of your debt, receives a 15%collateral incentive, and the remaining collateral is returned to you. This restores the position to a safe HF above 1.0 Liquidation is partial and only aims to bring the position back to safety. The incentive keeps liquidators active and the system solvent. Maintaining an HF above 1.2 is recommended during volatile markets. All liquidations happen automatically, reallocating collateral to the pool and returning any residual assets to the borrower @LayerBankFi this structure strikes a solid balance between user protection and protocol stability. Partial liquidations and a transparent HF system give borrowers more room to manage risk without the fear of their entire position being wiped out in one shot