What is an Insurance Fund?
The Insurance Fund is a fund set aside by the exchange to prevent losses from being passed on to other customers in the event of a liquidation, if the losses incurred are greater than the margin.
• If liquidation occurs and the market price moves unfavorably and the losses exceed margin, the difference is covered by the Insurance Fund.
Why is the insurance fund necessary?
• When the market is volatile, it is possible to get traded at a price that is unfavorable to the liquidation price and your losses may exceed your margin.
• If there is no insurance fund, the liquidating party's excess losses would have to be deducted from other users' profits.
The Insurance Fund is a mechanism to prevent this from happening.
How is the insurance fund secured?
In the event of a forced liquidation, the positive difference between the actual execution price and the liquidation price is credited to the insurance fund.
What is the insurance fund used for?
| Situation | How it is used |
| Liquidation loss coverage | In the event of a liquidation, if losses are greater than margin, the shortfall is covered by the insurance fund. |
| Market stabilization | Promote market confidence through insurance funds, even during extreme market fluctuations |
| User protection | Preventing other traders from being responsible for the losses of others |
💡 Example of using the Insurance Fund
• User A holds a BTC long position for 100,000 USDT
• Market plummets → liquidation price is reached
• But liquidated at 99,000 USDT due to lack of liquidity
• Loss is greater than initial margin → exchange covers the shortfall from the insurance fund
⚠️ The insurance fund is updated once daily at 00:00 UTC.
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[Web] How to check the Insurance Fund - Method 1
1. Go to the index price page by selecting [More] in the index price tooltip.
2. On the Index Price page, select [Insurance Fund History].
3. On the Insurance Fund History page, you can see the insurance fund for each pair.
[Web] How to check the Insurance Fund - Method 2
1. Select the icon to the right of Funding Rate.
2. On the Insurance Fund History page, you can check the insurance fund per pair.
3. On the Insurance Fund History page, you can check the insurance fund per pair.
