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Insurance Fund
The insurance fund is a key part of any exchange that allows leveraged trading. It plays a large role in cryptocurrency derivatives exchanges, both centralized and decentralized. An exchange with a large insurance fund means traders can expect a smooth trading experience, even when markets are illiquid or experiencing extreme volatility.
  • Typically a portion of traders funds are paid into the insurance fund when an account is liquidated.
  • The insurance fund pays out against shortfalls in margin in more volatile markets.
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