Insurance Fund

What is Insurance Fund

The cryptocurrency market experiences significant volatility, leading to the risk of accounts being liquidated, resulting in negative asset values. To counteract the risk of account liquidation, Coincall has established an insurance fund system aimed at maximizing user protection.

During a state of account liquidation, in order to enhance position management efficiency, the platform's risk control mechanism takes control of all positions within the account for centralized handling. Simultaneously, a portion of assets from the insurance fund account is utilized to cover the negative assets of the liquidated accounts.

The insurance fund is created through the collection of liquidation fees when accounts are forcibly closed. These fees are then injected into the insurance fund. In the event of account liquidation, the insurance fund is used to offset these losses, thereby reducing the likelihood of auto-deleveraging occurrences.

Regarding the liquidation fees, the fees are structured on a graduated scale based on the nominal value of the position (Futures' nominal value = position amount * mark price) as follows:

For liquidated positions in BTC and ETH:

Nominal value ≤ $10k, fee is 0.06% Nominal value ≥ $10k, fee is 1.5%

For liquidated positions in other currencies:

Nominal value ≤ $1k, fee is 0.06% Nominal value ≥ $1k, fee is 1.5%

For options positions, the fee is 0.19%.

The growth of the insurance fund balance arises from all collected fees from managed liquidated positions and funds regularly deposited by the platform. To ensure long-term sustainability, Coincall allocates the insurance fund reasonably and establishes a daily limit on insurance payouts. If the daily fund limit is exhausted, user accounts may display negative balances. Upon subsequent deposits, the system deducts the negative balance portion from the deposited amount.

Coincall has not yet publicly disclosed the details of the insurance fund. Once the specifics of the insurance fund are made public, the relevant information will be displayed on the appropriate pages.