# Liquidation Simulator

The **Liquidation Simulator** on Amply Finance helps you assess your risk exposure before borrowing. By simulating different collateral and debt scenarios, you can better understand your liquidation thresholds, leverage, and overall risk profile.

### Why Use the Liquidation Simulator?

* Avoid unexpected liquidations by testing different borrowing scenarios.
* Optimize your borrowing power without overleveraging.
* Gain full visibility into potential risks before executing transactions.

### How to Use the Liquidation Simulator

#### Accessing the Simulator

1. Navigate to the [Amply Finance Dashboard](https://amply.finance/dashboard/)
2. Click on the Simulation Calculator to start a new simulation.

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#### Selecting Collateral & Debt Assets

3. Choose up to 6 collateral assets from the available options.
4. Choose up to 6 debt assets for borrowing.
5. Enter the amount of each selected collateral and debt asset in token terms.
6. The system will automatically convert these values to USD equivalent.

<figure><img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfHsnDA3QNqfhhbTPxhRgpnIFBRdY34gUHK4RakVB7BbT3ZIxGzHJ8aE9MPIqsKR8v2ZNBpSTa5kP8r2CkTQcWuSsS2uzkUqk-MIuTtFhNy4jNEAkTRcX7t1239RIfZyMxexBjvjQ?key=nW72Yf9ZiTa3-CY0N1fvtw" alt="" width="375"><figcaption></figcaption></figure>

#### Understanding Your Risk

7. Once inputs are entered, Amply will automatically calculate:

* Total Collateral Value (in token and USD terms)
* Total Debt Value (in token and USD terms)
* Average Liquidation Price (Estimated collateral price that would trigger liquidation)
* Health Factor (Overall risk assessment of your position)
* Liquidation Buffer % (Your safety margin before liquidation)
* Leverage Ratio (The amplification of your position. Collateral/Debt)
* Effective Loan-to-Value (LTV) %

### Notes

* If your **Health Factor** is low (close to 1), consider reducing borrowed assets or increasing collateral.
* If your **Leverage Ratio** is **high**:
  * Means you're borrowing a significant amount compared to your collateral.
  * Amplifies potential gains if prices rise but also increases liquidation risk if prices fall.
* If your **Leverage Ratio** is **low**:
  * Means you're borrowing a smaller amount compared to your collateral.
  * Reduces potential gains but also significantly reduces the risk of liquidation
    * Experiment with different collateral and debt combinations to find an optimal borrowing strategy.
    * Assess whether your risk appetite allows for potential market volatility.
* **eMode (Efficiency Mode)**: Allows borrowing with higher LTV when using correlated assets (e.g., stablecoins)


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