ForTube V3 is scheduled to launch on March 27th as planned, and the finance model will be adjusted to improve security of the system.
ForTube V3 will bring the liquidation threshold of deposited and borrowed assets of users as a variable into the calculation of the health factor. An account with a health factor over 1 in V2 will be approximately less than 1 after V3 launch, which will trigger liquidation.
Therefore, please be sure to add assets or reduce debt before 00:00 on March 27th(GMT+8) to ensure that the health factor remains over 2, to reduce the risk of liquidation.
ForTube will pay attention to the changes of the user’s health factor and feedback to ensure that V3 launches smoothly.
Learn more about Health Factor below:
Health Factor
Health Factor (HF): a function of total staking assets and total loans, which is used to reflect the health of the user’s debt. The higher the value, the lower the possibility of liquidation and the higher the security status of funds.
Before understanding the health factor, we should understand the concepts of [Maximum Loan-to-Value Ratio] and [Liquidation Threshold].
Maximum Loan-to-Value Ratio (LTV): refers to the “Value Ratio” of borrowings and deposits, which represents the maximum borrowing capacity of a specific mortgage.
Example: If a user deposits 10,000 USD equivalent in ETH, and the maximum LTV of ETH is 90%, then the user can borrow up to 9,000 USD (10,000×0.9) in other currencies with ETH as a pledged asset.
Liquidation Threshold (LT): refers to the percentage at which a loan is defined as under-collateralized.
Below this percentage, it means that the user’s loan amount exceeds the maximum borrowing capacity set by the system, so the user’s pledged assets will be frozen and auctioned to alleviate the systemic risk caused by under-collateralization.
For example, a liquidation threshold of 80% means that if the value rises above 80% of the collateral, the loan is under-collateralized and could be liquidated.
Generally speaking, in the fund pool lending mode, the user’s borrowable amount is the sum of the value of each deposit asset and the product of the maximum Loan-to-Value ratio (LTV), minus the current total debt, that is:
∑(Vdi*Fi) — ∑Vbj
Among them,
Vdi: USD value of deposit asset i
Fi: Maximum Loan-to-Value ratio of deposit asset i
Vbj: Debt value of borrowed asset j
However, when users stake stable assets to borrow high-volatility assets, as long as the price of the borrowed assets rises faster, the borrower’s motivation to repay the loan will decrease, thereby increasing the risk of bad debts in the system. In order to solve this problem, we also consider the maximum Loan-to-Value ratio of the user’s borrowed assets, that is:
(∑(Vdi*Fi) — ∑(Vbj/Fj))*Fk
Among them,
Fk: Maximum Loan-to-Value ratio of borrowed asset k
When the value of user deposit assets drops or debt rises, liquidation may be triggered. The health factor is a numerical value that identifies the health of the account debt. When the health factor is 1, the liquidation is triggered. In ForTube V2.0, the formula for calculating the health factor is:
∑(Vdi*Fi) / ∑Vbj
ForTube V3 distinguishes the maximum Loan-to-Value ratio and the liquidation threshold. The liquidation threshold is a value slightly larger than the maximum Loan-to-Value ratio. Therefore, our health factor calculation formula is modified as:
∑(Vdi*Li) / ∑(Vbj/Lj)
Among them,
Lj: Liquidation threshold of asset j
Be sure to follow us on social media for more updates and mining campaigns:
▲Announcement channel: https://t.me/the_force_announcement
▲Medium: https://fortube.medium.com/
▲ForTube website: https://www.for.tube/home
▲Twitter: https://twitter.com/ForTubeFi
▲Github: https://github.com/thefortube
▲Knowledge Library of the ForTube platform: https://docs.for.tube/