> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dynamo.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidation Risk

> How Dynamo visualizes your risk of liquidation based on collateral price movements.

Dynamo shows your liquidation risk based on how the price of your collateral moves. This helps you understand how much collateral price decline your [Morpho borrow](https://dynamo.finance/) position can absorb before being eligible for liquidation.

## How It Works

For each open borrow position, Dynamo calculates and displays:

* **Current health factor** — Your position's distance from the liquidation threshold (LLTV).
* **Price drop tolerance** — How far your collateral's price can fall before your health factor reaches 1.0 (the liquidation threshold).
* **Liquidation price** — The collateral price at which your position becomes eligible for liquidation.

## Reading the Risk Indicator

The liquidation risk display uses the same Safe / Moderate / At Risk / Liquidated tiers as the

| Risk       | Risk Level                                                      |
| :--------- | :-------------------------------------------------------------- |
| Safe       | Low — healthy buffer                                            |
| Moderate   | Medium — moderate buffer                                        |
| At Risk    | High — stress zone, small price moves could trigger liquidation |
| Liquidated | Liquidatable                                                    |

## Staying Safe

* **Add collateral** to increase your health factor.
* **Repay debt** to reduce your borrowed amount and move away from the liquidation threshold.
* **Use the Safety Margin** to set a conservative target LTV and keep automatic discipline on your position.

For a deeper explanation of how health factors and liquidations are calculated, see the Methodology page.