The LBank Risk Insurance Fund is a core mechanism designed to enhance the safety and stability of futures trading. It protects users from losses due to extreme market fluctuations (such as account blow-ups) and minimizes counterparty liquidations. Through transparent rules and efficient risk management, LBank is committed to creating a fair and stable trading environment. Below, we detail the fund’s operations, rules, and significance.
How the Risk Insurance Fund Works
The primary purpose of the Risk Insurance Fund is to cover losses when a user’s account balance falls below zero (known as an “account blow-up”). The fund is primarily financed by additional fees paid by non-bankrupt users during forced liquidations, which are injected into the fund to address potential market risks.
Operations
-
Handling Account Blow-Ups: When a user’s account balance drops below zero due to severe market volatility and cannot be fully liquidated through normal procedures, LBank takes over the remaining positions and uses the Risk Insurance Fund to execute reverse liquidations, reducing systemic risk.
-
Auto-Deleveraging: If the fund is insufficient to cover the remaining positions of liquidated users, the system triggers auto-deleveraging based on a preset algorithm to ensure market fairness and stability.
-
Fund Allocation:
-
BTC/USDT and ETH/USDT Perpetual Futures: These high-volume futures each have dedicated Risk Insurance Funds to address their unique market volatility.
-
Other Perpetual Futures: Share a single Risk Insurance Fund, allowing flexible resource allocation to meet diverse market needs.
Rules of the Risk Insurance Fund
To ensure effective operation, LBank has established the following key rules:
-
Maximum Net Nominal Position Limit: The fund monitors net nominal positions, which must not exceed 100% of the fund’s total value. Excess positions are automatically converted to counterparty auto-deleveraging.
-
Deleveraging Algorithm: When the fund cannot fully cover liquidated positions, the system executes deleveraging based on a preset algorithm, reducing the frequency of counterparty liquidations.
-
Transparency: Users can check the fund’s balance and historical usage records on the LBank official platform, ensuring transparent information.
Importance of the Risk Insurance Fund
The Risk Insurance Fund is a cornerstone of LBank’s risk management and user protection strategy. It effectively addresses extreme market conditions (such as sharp price swings or account blow-ups) and enhances market stability and fairness by reducing forced counterparty liquidations. Transparent rules and efficient execution give users greater confidence in futures trading, alleviating concerns about sudden risks.
How to Access and Participate
To check the Risk Insurance Fund’s balance, historical usage records, and related activity details, users can contact our official customer service at service@lbank.com. We are committed to providing professional and prompt responses.
Additional Protection: $100 Million Futures Risk Insurance Fund Campaign
In addition to the core Risk Insurance Fund, LBank has launched a $100 million Futures Risk Insurance Fund campaign, offering 1.2x compensation for losses caused by platform-related “price wicks” and providing a 10,000 USDT airdrop for position holders. For details, refer to the official LBank announcement: Futures Price Spike? $100 Million Compensation Fund!
The LBank Risk Insurance Fund, with its robust blow-up handling, transparent management, and flexible resource allocation, provides a secure and stable environment for futures trading. Combined with the $100 million campaign, LBank strengthens user protection and mitigates the impact of market anomalies. Join LBank futures trading today to experience unparalleled trading security!