A bot repays your debt by seizing your collateral — but it takes more than the debt amount. On Aave V3, the liquidation bonus (penalty for you) is 10% for WBTC and 5% for ETH. On a $50,000 position, that's $2,500–$5,000 lost in seconds, on top of the market drop that triggered the liquidation.
Know Your Liquidation Price Before You Borrow
The formula: liqPrice = debt_USD / (collateral_amount × LT). With 1 BTC and $45,000 debt on Aave V3 Arbitrum (LT 78%): liqPrice = 45,000 / (1 × 0.78) = $57,692. If BTC is at $65,000 today, you have an 11% buffer. Is that enough for you to sleep comfortably? If not, borrow less.
Target HF 1.7 at Opening, Never Let It Drop Below 1.3
HF 1.7 gives you roughly a 30% buffer against price drops. When BTC drops 20% in a crash, you're still at HF 1.36. Then you have time to react. Opening at HF 1.3 means a 20% drop brings you to HF 1.04 — you're almost liquidated before you see the alert.
Keep a Stablecoin Reserve (10–20% of Borrowed Amount)
If BTC drops 15% and your HF falls to 1.15, your fastest option is to repay part of the debt immediately. If your borrowed USDC is fully deployed, you can't repay without selling — which may mean selling at the bottom. Keep 10–20% of your borrowed amount in a wallet you can access in 5 minutes.
Set Price Alerts at Your Liquidation Price + 20%
Use Chainlink's price feed or a service like Debank, Zerion, or even CoinGecko alerts. Set the alert 20% above your liquidation price. When you get the notification, check your HF and decide whether to add collateral or repay. This gives you time to act before the crisis, not during it.
Account for Borrow Interest in Your Buffer
At 6.5% APY, $40,000 borrowed becomes $42,600 after one year without any price change. That raises your liquidation price by ~$3,300 on a 1 BTC collateral position. Always recalculate your liquidation price monthly and adjust your alert thresholds. The Aave calculator shows you the annualized borrow cost directly.
Avoid Opening New Positions During High Volatility
Funding rates on GMX, borrow rates on Aave, and market liquidity all deteriorate during volatility spikes. A position you open at an 8% Aave borrow APY during a market event may see that rate spike to 30%+ within hours if utilization is high. Open positions in calm markets when spreads and rates are predictable.
Use the Position Dashboard to Monitor Without Connecting Your Wallet
The OrnyTools Position Dashboard reads your live Aave V3 health factor, collateral value, and debt from the blockchain using only your public wallet address — no wallet connection required. Bookmark it and check it daily. It takes 10 seconds and tells you exactly where you stand in real time.
Calculate your exact liquidation price right now — before the market moves.
🔴 Liquidation Calculator → 📊 Live Dashboard →