# Liquidation Profitability Simulation

**Overview**

This indicator simulates according to predetermined variables, how profitable it is for a liquidator to liquidate positions according to their health factor.

**How can I use it?**

<figure><img src="https://lh7-us.googleusercontent.com/hryCo5Vfq4XKXtLvFTnsEofmDa_ByoH_2rhcwOoRMAW6Ecjd7CQCXQ9TSVuMy_deYZu611mEeLGC8wbtxzEq1UYg2JVjAo-hWgurs58IwD2Emc2ULMR0cOsO_Gh3Yv9Rv406UdSUt2-FbiPzAieUsxU" alt=""><figcaption></figcaption></figure>

The indicator measures on its y-axis how profitable it is in percentage terms to liquidate positions according to their respective health factors shown in the x-axis.

By simulating the profitability of liquidating positions, this indicator can give investors further insight into the well being of the protocol. This can provide valuable insights into the incentives of liquidators to maintain a depositors safe. A higher percentage profitability gives liquidators a greater interest to maintain positions in their supposed parameters.&#x20;

By considering the potential profitability of liquidating positions, as a risk vector it can help depositors to assess the risk associated with holding onto a position in the protocol. This indicator can inform investors about when the level of profitability is too low for liquidators to maintain a safe environment and keep the protocol away from bad debt.

A low percentage profitability for liquidators can be caused by several factors, some of which include: external liquidity on the blockchain in order to liquidate assets, protocol parameters, borrow caps on assets between others.

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