# Understanding Risk Factor

Each lending position essentially consists of a **supplied** and a **borrowed** part. The ratio of the 2 determine the health of your position. Take the following example:

#### Supplied

* Asset: 1 EGLD
* Price: 15$
* Loan to Value: 75% (you can borrow up to 75%\*15$=**11.25$**)
* Liquidation Threshold: 80% (you get liquidated when your borrowed reaches 80%\*15$=**12$**)

#### Borrowed

* Asset: 350 XOXNO
* Price: 0.03$

#### Risk factor

* The risk factor is computed as 

$$
\text{risk(position)} = \frac{\text{borrowedInDollars}}{\text{liquidationCollateralInDollars}}
$$

* In above case, that would be

$$
\text{risk(position)} = \frac{\text{350 \* 0.03$}}{\text{1 \* 15$ \* 80%}} = \frac{\text{10.5$}}{\text{12$}} = 87.5%
$$

That means the position is medium risky. If the value of your collateral drops or the value of your borrowed surges in price, [Liquidation](https://docs.xoxno.com/xoxno-ecosystem/lend-and-borrow/liquidation) can occur.