MUFEX
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English
  • What is MUFEX?
    • πŸ“–Overview
    • 🏦MUFEX's Decentralized and Trustless Approach
    • πŸ“ˆMUFEX Perpetual Trading System
    • πŸ’ŽMUFEX Liquidity Pool
    • πŸ—ΊοΈRoadmap
  • Start Using MUFEX
    • πŸ‘©β€πŸš€Onboarding
    • πŸ’΅Depositing
      • Deposit FAQ
        • What should I do if the deposited currency has not been received?
        • How to solve recharge error?
        • Funds Recovery Guide
    • πŸ“ˆTrading
      • πŸ’ΉOpen/Close Positions
      • πŸ’²Trading Fees
      • πŸ–₯️Market , Limit & Conditional Order
      • πŸ›°οΈTake Profit & Stop Loss
      • 🏝️Isolated Margin/ Cross Margin
      • πŸ“Trading Rules
        • Risk Limit
        • Risk limit Parameters
        • Index Price
        • Mark Price
        • Liquidation Process
        • Margin Mechanism
        • Funding Fee
        • Insurance Fund
        • Auto-Deleveraging (ADL)
      • πŸ“‘Contract Specs
    • πŸ’ŽEarn
    • 🏧Withdrawal
      • Withdrawal FAQs
        • Why Hasn't My Withdrawal Been Credited?
    • πŸ’²Fee Rates
  • Technical Solution
    • πŸ—οΈTechnology Architecture
    • 🏦ZK-Rollup Asset Proof Design
    • πŸ›₯️Dunkirk Asset Recovery
  • What makes MUFEX secure?
    • πŸ“‘MUFEX Security White Paper
      • Security Team and Its Functions
      • Client Security
      • Endpoint Security
      • Network Security
      • Server Security
      • Application Security
      • Smart Contract Security
      • Data Security
      • Physical Infrastructure Security
    • πŸ“”Smart Contracts
    • πŸ”Audit
    • 🐞Bug Bounty
  • Testnet
    • πŸ§‘β€πŸ³Testnet Walkthrough
      • 1️⃣Get started with MUFEX
      • 2️⃣Get Test Tokens
      • 3️⃣Account & Assets
      • 4️⃣Depositing & Withdrawing
      • 5️⃣Trading
      • 6️⃣Earn via MLP
      • 7️⃣Feedback
      • 8️⃣Common Questions
  • Support
    • πŸ””MUFEX Announcement
      • Notice on Upgrade and Adjustment of the Affiliate System
      • MUFEX Upcoming Delisting of Trading Pairs Reminder
      • MUFEX Notice: Delisting of Certain Trading Pairs
      • MUFEX Coin Pair Adjustment Notice
      • MUFEX is Upgrading MLP and Copy Trading Features
      • MUFEX to Discontinue MLP and Copy Trading Services
      • MUFEX Announcement: Notice on Delisting COMPUSDT and GMTUSDT Contracts
      • MUFEX Announcement: System Upgrade and Trading Suspension Notice Postponement
      • System Upgrade and Trading Suspension Notice
      • MUFEX Cryptocurrency Exchange Service Area Statement:
      • Adjusting Parameters for Certain Contract Trading Pairs (2024/2/7)
    • ❓FAQ
      • How to Delete My MUFEX Account?
      • Why is my IP banned from service
      • Can I use MUFEX service if I don't have an web3 wallet
      • Why do I need to deposit first?
      • Why didn't I see the asset balance change after I deposit?
      • Why did I receive an email from Unipass?
      • What is Effective Leverage?
    • πŸ‘©β€πŸ”¬Help Center
    • πŸ“Release Log
    • πŸ‘¨β€πŸ«MUFEX Affiliate Program
    • πŸ’»Social Media & Communities
    • πŸ’ΌBusiness Cooperation
    • πŸ“±Install MUFEX through the App Store
      • How to get an Apple ID in the US
      • How to use Taobao Purchase a non-mainland Apple ID
      • How to install MUFEX iOS TestFlight
    • πŸ™‹β€β™‚οΈEarly Ambassador Program
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  1. Start Using MUFEX
  2. Trading
  3. Trading Rules

Insurance Fund

MUFEX is a decentralized cryptocurrency derivatives trading platform that does not engage in any trading activities. Therefore, it is crucial to protect the interests of both traders and the platform, and to avoid any party suffering contract losses.

During forced liquidation, MUFEX uses an insurance fund to reduce the likelihood of triggering automatic deleveraging. If forced liquidation cannot close the position at a price better than the bankruptcy price, the insurance fund is utilized to cover the loss caused by the liquidation, preventing the activation of the automatic deleveraging mechanism.

Mechanism of the Insurance Fund

During liquidation, the balance of the insurance fund will increase/decrease depends on the price difference between the final executed price and its bankruptcy price of that liquidated position.

  • When liquidations can be executed in the market at a price better than the bankruptcy price, the remaining margin will be added to the insurance fund.

  • Vice versa, when the final executed price is worse than the bankruptcy price, the contract losses will be covered by the insurance fund.

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Last updated 1 year ago

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