ZKE Insurance Fund

Asset security is the top priority. Our insurance fund is designed to cover losses from liquidation events under extreme market conditions, reduce the likelihood of users triggering automatic deleveraging (ADL), and ensure a safe experience when using leveraged and futures products.

Real-time tracking of current insurance fund balance

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Cover System Liquidation Losses

When the liquidation system fails to hedge risks at bankruptcy price, the fund steps in to absorb the resulting system losses.

Reduce Probability of ADL Triggering

Act as the last line of defense to minimize the chance that innocent users are automatically deleveraged during extreme market movements.

Protect Regular Traders

Prevent profitable users from being forced to "pay for others' bankruptcies," safeguarding traders' net profits.

Fully Transparent Funds

Historical injections and allocations are traceable, ensuring transparent asset management.

Unified Independent Pool

All perpetual contracts denominated in the same margin currency share the same underlying insurance fund pool.

Automated Clearing Engine

High-frequency risk control systems make millisecond-level judgments and automatically transfer surplus profits into the insurance fund.

Fund Sources

How Is the Insurance Fund Generated?

When a user's position triggers liquidation, if the system engine closes the position at a better-than-"bankruptcy price" on the market, all generated profit difference will be injected into the insurance fund.

1

Liquidation Takeover

Upon reaching the margin call threshold, the engine takes over the position at takeover price.
2

Position Closure

If closure price is better than bankruptcy price, the system generates surplus profit.
3

Fund Injection

The profit is automatically transferred to the fund pool to address future extreme loss scenarios.

Fund Usage

How Are Loss Compensation and Allocations Handled?

In case of losses due to "forced liquidation with negative equity", the insurance fund covers first, with any excess allocated among currently profitable positions according to rules.

20%

Covered by insurance fund balance first

80%

Shared among top-profitable positions

Profit User Allocation Rules:

1. Within settlement cycle, profitable positions are sorted by profit descending.
2. Identify “top-profit” positions until cumulative total reaches 90% of overall profit.
3. Only these large-profit positions participate in allocation, protecting small retail traders.
4. Recorded in personal cash flow as "Allocation / Apportionment".

Your Share = Total System Loss × (Your Period Profit ÷ Total Top Profit)

The insurance fund serves as a safety cushion set up by the exchange, aiming to compensate for system clearing losses caused by user bankruptcies (negative account assets) under extreme market conditions, thereby reducing the probability of triggering automatic deleveraging (ADL) and protecting the interests of profitable users.

When the system determines that a position needs to be forcibly liquidated, the clearing engine takes over the position. If the final closing price achieved by the clearing engine on the market is better than the user’s “bankruptcy price” (the price where equity equals zero), a portion of profit emerges. This profit does not belong to the platform but is entirely injected into the insurance fund pool.

During extreme one-sided market trends causing massive chain reactions of liquidations, if the insurance fund cannot fully cover the bankruptcy losses, the system will trigger the automatic deleveraging mechanism (ADL). At this point, the system will forcibly close certain profitable positions based on preset priorities (typically those with high returns and high leverage) to absorb remaining system losses. The rule we have established—"20% covered by fund, 80% shared by profits"—is intended to slow down the depletion rate of the fund as much as possible.

Liquidation Takeover

Position Closure

Fund Injection