Allocator Health Factor

Overview

This indicator monitors the health of allocators that have open positions of minted osETH. The metric measures the ratio of the value of osETH minted compared to the value of the ETH being used as collateral. The health of a position decreases as the health factor approaches 1. As the health factor approaches 1, the position becomes open to being liquidated or the ETH in the positions becomes redeemable for users that want to redeem their osETH for ETH.

How can I use it?

Examining this indicator at the protocol level provides an aggregate view of the health of all vaults in Stakewise. If a large portion of allocator positions were to be above a ratio of 0.9, this would indicate that there is a risk of cascading liquidations if there was a significant price movement to osETH compared to ETH such as a depeg.

In such a scenario, there would be a supply shock as liquidators buy osETH of the market to repay allocator positions which could impact users that have deployed osETH into AMM pools. Furthermore if the depeg were to be exacerbated by the cascading liquidations, previously healthy allocator positions could be at risk of liquidation as well.