Insurance Fund comes into play when we are unable to close a position in liquidation before its bankruptcy price is breached.
The Liquidation Engine is prepared to close all the positions it acquires for a loss of 5% for BTC & ETH contracts, and 2% loss for all other contracts. This loss in funded from the Insurance Fund. Details of our Liquidation Mechanism are available here. ADL is triggered only if the Liquidation Engine is unable to close a position within the loss threshold of the Insurance Fund.
Insurance Fund Income
A Liquidation Charge is levied on all positions that go into liquidation. This Liquidation Charge is deposited into the Insurance Fund.