> For the complete documentation index, see [llms.txt](https://unitus.gitbook.io/unitus/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://unitus.gitbook.io/unitus/products/borrow/adequacy-ratio.md).

# Adequacy Ratio

A metric used to assess the health and safety of a user's collateralized position.

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&amp;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]