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The Degraded state is actually detected by evaluating if the "status_summary" value is less than or equal to 99. The status_summary being a value from 0 to 100 which is calculated by diving dividing the number of status objects which are not OK are OK by the overall number of status objects and multiplying by 100.
To see what status objects a device has and what state they are in refer to the Node's "status" tab in the Node's widget in NMIS or the Node's Status Summary page if you have opCharts.
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