Exercise 2: Calculation Practice and Risk Metrics

⏰ Time Investment: 45-60 minutes 🎯 Goal: Master Health Factor calculations, LTV analysis, and interest rate mathematics

📚 Required Reading Integration 📖 Primary: Lesson 2: The Mathematics of Lending and Borrowing 📖 Supporting: Lesson 3: Risk Management Fundamentals

🔢 Phase 1: Health Factor Calculations (20 minutes)

Basic HF Calculation

Scenario: You deposit 5 ETH @ $2,000/ETH and borrow $6,000 USDC

• Collateral: $10,000

• Debt: $6,000

• Liquidation Threshold: 85%

Exercise 1: Calculate Health Factor

Formula: $HF = \frac{Collateral Value \times LT}{Total Debt}$

• HF = (_____ × 0.85) ÷ _____ = _____

Exercise 2: What does this HF mean?

• Your answer: _________________________________

HF with Price Changes

Scenario: ETH drops to $1,500

Exercise 3: Calculate new HF

• New collateral value: _____

• New HF = _____

• Status: _____ (Safe/Warning/Danger)

Exercise 4: At what ETH price would liquidation trigger? (HF = 1.0)

• Calculation: _____

• Liquidation price: $_____

Health Factor Calculation Template

💧 Phase 2: Utilization and Interest Rates (15 minutes)

Utilization Calculation

Pool Statistics:

• Total Supplied: 100 USDC

• Total Borrowed: 70 USDC

Exercise 5: Calculate utilization rate

• Utilization = _____ ÷ _____ = _____%

Exercise 6: If utilization is 70%, what happens to rates?

• Supply rate trend: _____

• Borrow rate trend: _____

Interest Rate Impact

Scenario: Pool utilization spikes to 95% (above kink)

Exercise 7: What happens?

• Supply rate: _____ (increases dramatically)

• Borrow rate: _____ (increases dramatically)

• Risk: _____ (liquidity freeze possible)

Utilization Rate Worksheet

📊 Phase 3: LTV Analysis (10 minutes)

Maximum Borrowing Capacity

Scenario:

• Collateral: $20,000 ETH

• Maximum LTV: 75%

• Liquidation Threshold: 80%

Exercise 8: Calculate maximum borrow

• Max borrow = $20,000 × _____ = $_____

Exercise 9: If you borrow $12,000, what's your safety buffer?

• Current LTV: $12,000 ÷ $20,000 = _____%

• Safety buffer: _____% - _____% = _____%

✅ Self-Assessment

Rate your calculation skills:

• Health Factor calculations: __/5

• Utilization rate analysis: __/5

• LTV and safety buffer: __/5

• Interest rate dynamics: __/5

Areas needing practice: _________________________________

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