What is the liquidation penalty on Aave V3?

The liquidation penalty (bonus paid to liquidators) on Aave V3 varies by asset: 5% for stablecoins, 7.5% for ETH and LSTs, and up to 10% for more volatile assets like WBTC. On a $50,000 WBTC position, liquidation costs you an additional $5,000 on top of the market drop that triggered it.

How can I avoid liquidation in DeFi?

Keep your health factor above 1.5, set price alerts at your liquidation price minus 10-15%, recalculate your liquidation price monthly to account for interest compounding, avoid borrowing at maximum LTV, and maintain a buffer collateral in your wallet ready to add if needed.

What is the exact formula for liquidation price in Aave V3?

Liquidation Price = Total Debt / (Total Collateral Amount × Weighted Liquidation Threshold). For a single asset: Liq Price = Debt / (Collateral × LT). Example: $40,000 debt / (1 BTC × 0.78 LT) = $51,282. This price increases over time as interest compounds on your debt.

RedZone — Aave V3 Liquidation Calculator

Are you in the RedZone?

Health Factor, exact liquidation price, and buffer — live prices, 6 chains, 35+ assets.

⬡ Ethereum ↑ Arbitrum ⬟ Base ⭕ Optimism ⬟ Polygon ▲ Avalanche

DeFi liquidation calculator — know your exact price before it's too late

Liquidation in DeFi is brutal: when your health factor hits 1.0, liquidators can instantly seize up to 50% of your collateral and charge an 8–10% bonus on top. On Aave V3, the WBTC liquidation penalty is 10% — on a $50,000 position that's $5,000 gone in seconds, on top of the market drop that triggered it. This calculator gives you the exact liquidation price using official Aave V3 protocol parameters, live Chainlink oracle prices on 6 chains and 35+ assets, and the real liquidation threshold for your collateral type. Enter your collateral and debt — see exactly how far the market has to move to wipe you out.

Your Aave V3 position⛓ Chainlink live

Collateral amount BTC ₿

Current price⛓ Chainlink live

Total debt (all assets) USD $

▾ Advanced (LT · Max LTV · Penalty)

Liq. Threshold 78%

Max LTV 73%

Liq. Penalty %

Current LTV —

Collateral value—

Max borrowable—

Liquidation price—

Drop to liquidation—

Penalty at liquidation—

Price drop simulator

Drag to simulate a market crash. See the impact on your Health Factor and liquidation risk in real time.

0% −80% −0%

Simulated price

—

Health Factor

—

Simulated LTV

—

Status

—

Crash Stress Test

Your position at each price level. Where does it break?

Price drop	Collateral price	Health Factor	Current LTV	Status

For informational purposes only. Not financial advice. Always do your own research before making any financial decision. Terms · Methodology