What Is the Insurance Fund in Crypto Futures?

The Insurance Fund is a reserve fund built from liquidation surpluses that protects the stability of the Crypto Futures trading system. When a liquidated position closes with funds remaining after covering its loss, that surplus is added to the fund instead of being returned to the trader who was liquidated. This reserve ensures the winning side of a trade still gets paid in full even if the losing side's position can't fully cover what it owes. The Insurance Fund is a shared, system-wide backstop rather than something tied to any single account.

• How it's funded — surplus from liquidated positions closed with funds remaining flows into the Insurance Fund instead of being returned to the liquidated trader.
• What it's used for — it covers the shortfall when a liquidated position can't fully pay out the profitable side of the trade.
• Why this protects you as a trader — it prevents shortfalls from being absorbed out of profitable traders' gains under normal conditions.
• A system-wide safeguard, not a personal one — it's a shared reserve supporting overall platform stability, not tied to your individual account.
• A sign of system health — a fund that keeps growing means more surplus is collected than paid out, reflecting a well-functioning liquidation process.

Related questions:

Q: Where does the money in the Insurance Fund come from?
It comes from the surplus collected when a liquidated position closes with funds remaining after covering the loss, rather than that surplus being returned to the trader — every such liquidation contributes.

Q: Does the Insurance Fund protect my individual position specifically?
Not directly — it's a shared reserve protecting the overall trading system. Your own liquidation risk still depends entirely on your leverage, margin, and margin mode.

Q: What happens if a liquidation shortfall is larger than the Insurance Fund can cover?
This is rare, and Pluang maintains other backstop mechanisms, such as auto-deleveraging, reserved specifically for such extreme scenarios rather than routine use.

Q: Can the Insurance Fund ever run out?
In theory it could be drawn down faster than it's replenished during an extreme, sustained event affecting many positions, which is why auto-deleveraging exists as a further backstop.