The risk protection fund aims to cover losses incurred when a margin call occurs, reduce losses for bankrupt traders, guarantee profits for profitable counterparties, and reduce the likelihood of high-yield traders automatically reducing their positions.
Risk Protection Fund Rules:
When a position can be liquidated in the market at a price better than the bankruptcy price, the remaining margin will be added to the insurance fund.
Conversely, if the final execution price when the position is strong is lower than the bankruptcy price, the contract loss will be borne by the insurance fund.
When the insurance fund is insufficient to cover the difference between the final liquidation price and the bankruptcy price, the contract losses will be taken over by the automatic liquidation system and borne by the users on the platform.
Assuming a user holds a long position in BTC/USDT, the forced liquidation price is 40,000 USDT, and the bankruptcy price is 39,950 USDT; once the price reaches 40,000 USDT, the forced liquidation of the position will be triggered.
If the position can be closed at any price above 39,950 USDT, such as 39,980 USDT, the excess margin will be transferred to the insurance fund; conversely, if the liquidation price is below 39,950 USDT, such as 39,930 USDT, the insurance fund will be used to cover the losses from the liquidation.
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B9 Crypto Operations Team
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