An insurance fund is a reserve set aside by a cryptocurrency exchange or trading platform to protect against losses from liquidations, unexpected events, or other risks. Its primary purpose is to cover deficits that may occur due to forced liquidation of leveraged positions or unexpected market volatility, ensuring that traders’ positions can be settled even if there are insufficient funds on the losing side of a trade. The insurance fund pays on behalf of the counterparty in case of default.
What is an Insurance Fund?
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