There is one insurance fund shared across the protocol. Each market has access to a fixed-percentage budget of the total insurance fund balance per close-out event. This means the amount available to a given market depends on the current fund balance and the market’s configured share.
The insurance fund is part of the protocol’s backstop. It is used when a liquidated position’s margin cannot safely cover the outcome at the time the protocol’s close order fills:
at fill: the position’s remaining margin is forfeited and sent to the insurance fund.
at fill: the position’s margin is negative, so the insurance fund pays the deficit to keep the system solvent.
These cases correspond to the “Seized” and “Underwater” position health statuses described on the Liquidation page.If a close-out would exceed the market’s insurance fund budget, or a small further price move could push it over, ADL (auto-deleveraging) triggers as a last resort.
The insurance fund receives capital from two sources:
A share of collected fees: After rebates, the remaining fees from each matching cycle are split between the insurance fund and the protocol. Currently all of the remainder goes to the insurance fund (see Fees and Rebates).
Seized position margin: When a liquidated position is seized at fill, its remaining positive margin is forfeited to the fund.
Last modified on October 23, 2026
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