# Adequacy Ratio

At Unitus, we consider the Adequacy Ratio as the liquidation threshold. You should always keep watch on your Adequacy Ratio and keep it above 1. Allowing your debt position to fall below 1 will result in a portion of your collateral being liquidated at a discount. This mechanism helps protect lenders from financial losses.

<figure><img src="https://3255163886-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FUqOJwCE5efwdoF3WWotj%2Fuploads%2FCpV5cCON75kXcEEIIKa3%2FAR.webp?alt=media&#x26;token=f392e254-d706-4784-ba1b-f90a032eccd2" alt=""><figcaption></figcaption></figure>

〖Amount〗\_col : supplied asset amount as collateral

〖Price〗\_col : collateral asset price in USD

〖LTV〗\_col : collateral asset loan to value, in range \[0,1}

〖Amount〗\_loan : borrowed asset amount

〖Price〗\_loan : borrowed asset price in USD

〖BorrowFactor〗\_loan : borrowed asset borrow factor, in range {0,1]


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