The Risk Reserve Fund is a mechanism designed to protect the overall operation of the exchange and the interests of traders.
In the event of severe market volatility or systemic risks, the insurance fund is used to cover losses and ensure the exchange can continue operating while safeguarding traders' interests.
The Risk Reserve Fund provides an additional layer of security to mitigate the impact of extreme market conditions or other adverse events on traders.
Risk Reserve Fund Mechanism:
Forced liquidation may lead to an increase or decrease in the insurance fund, depending on the price difference between the liquidation price and the bankruptcy price.
1. Increase in the Risk Reserve Fund: If the liquidation price is better than the bankruptcy price, the remaining margin will be added to the insurance fund.
2. Decrease in the Risk Reserve Fund: If the bankruptcy price is better than the liquidation price, the additional loss will be subsidized by the insurance fund.
※ If the Risk Reserve Fund cannot cover the price difference between the liquidation price and bankruptcy price, the loss will be handled by the automatic liquidation system and shared by the platform users. The USDT-M trading pairs share a common Risk Reserve Fund pool.