Aave Loans And Their Health Factors

This post examines borrowers with health factor less than 1 and their borrowed tokens. We will identify all loans that are defaulted on Aave with health factor less than 1 and not yet liquidated due to high gas price. Also we will examine the borrowers those who are liquidated and check if there is any correlation with the tokens they borrowed and the health factor of their loans.

This chart shows the health factor by collateral of loans that are in a healthy state. A loan is considered in healthy state if the collateral is sufficiently high to cover the amount of money borrowed in Aave ecosystem. The higher the health factor, better the collateralization ratio of the loan. As you see in the chart below those who borrowed stable-KNC, variable-SNX, variable-YFI and variable-xSushi maintain the highest health factor. They are above well over 2.7.

Lets us look at the bad loans – the loans that are under collateralized but not yet liquidated due to gas price issues or no liquidator finding them attractive to liquidate. Most the bad loans, that has health factor less than 1, are associated with variable-WETH, variable-USDC and variable-BTC.

Now lets look at the health factor of bad loans by borrowed currency on AAVE.

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