Aave-style lending — collateral ratios and liquidations

• LTV (Loan-to-Value): maximum borrow size as % of collateral value. ETH on Aave: ~75%.
• Liquidation threshold: the LTV at which a liquidator can seize your position. ETH: ~80%.
• Health Factor = (collateral × liqThreshold) / debt. Must stay > 1 or you get liquidated.

You deposit 3 ETH at $3000/ETH = $9000 collateral. You borrow 5000 USDC.

• LTV = 5000 / 9000 ≈ 55.6% (well under 75%, safe to take this loan)
• Liquidation threshold for ETH = 80%, so max-safe debt = 9000 × 0.8 = 7200 USDC
• Current debt 5000 << 7200 → Health Factor = 7200 / 5000 = 1.44 → safe

If ETH drops to $2100/ETH: collateral = 6300. Max safe debt = 6300 × 0.8 = 5040. Debt still 5000 → HF ≈ 1.008. One more drop → liquidation.

When liquidated: a liquidator repays some of your debt and seizes your collateral at a discount (usually 5-15%). You lose the premium.

Compute the Health Factor given inputs.