# User Risk Parameters #### 1. Liquidation Threshold Echelon determines loan risk by calculating a Liquidation Threshold, which reflects the weighted average of each collateral type within the total collateral. If a borrower’s loan value exceeds this threshold, the position becomes eligible for liquidation to protect the protocol. #### 2. Liquidation Penalty When liquidation occurs, a Liquidation Penalty applies to the collateral’s value, acting as a fee. #### 3. Health Factor The Health Factor gauges an account’s overall risk by comparing collateral to borrowed assets while accounting for market fluctuations. If the Health Factor drops below 1, the account is under-collateralized, triggering potential liquidation to maintain solvency. #### 4. Reserve Factor A portion of the interest generated is allocated to the Reserve Factor, which is adjusted according to each asset’s risk profile. #### 5. Collateral Usage Certain assets are restricted to Isolation Mode due to higher centralization risks, while others may not serve as collateral because of limited testing or liquidity. Depending on their risk assessment, assets are listed either as isolated market pairs or in the main market. The Echelon App’s Markets page offers up-to-date criteria for each pool. Liquidity and volatility strongly influence risk parameters. Higher-volatility assets feature lower loan-to-value (LTV) ratios and higher liquidation thresholds, while more stable assets like stablecoins, APT, and Liquid Staked APT allow higher LTV limits. Maximum LTV, liquidation thresholds, liquidation bonuses, and reserve factors are all configured on a per-market basis. Echelon’s parameters are designed to adapt in real time, maintaining a stable and secure lending environment. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.echelon.market/echelon/security/user-risk-parameters.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.