Negociação de futuros

Insurance Fund

Última atualização: 31/12/2025

1. What is the Insurance Fund

The Insurance Fund is a risk buffer mechanism set up by KuCoin for futures trading. It is used to handle positions that cannot be fully closed at a better price than the bankruptcy price during liquidation, in order to reduce the risk of negative account balance and lower the probability of triggering the Automatic Deleveraging (ADL) mechanism.
When market liquidity is insufficient or during extreme market volatility, liquidation orders may not be fully executed on the secondary market. In this case, the Insurance Fund will intervene to take over the unfilled portion of the position and settle it at the bankruptcy price, ensuring the liquidation process is completed smoothly.

 

2. How the Insurance Fund Works

When a user’s position triggers liquidation, the liquidation system will take over the position and attempt to close it on the market at the bankruptcy price:
  • In Cross Margin Mode, the system only intervenes if the position’s value is less than 600,000 USD.
  • In Isolated Margin Mode, the system only intervenes when the position is at Level 1 (the lowest risk tier).
If insufficient market depth prevents part of the position from being closed at the bankruptcy price, the Insurance Fund will take over the unfilled portion and settle it at the bankruptcy price, with profits or losses borne by the fund.
In extreme market conditions where the Insurance Fund cannot cover additional losses, the Automatic Deleveraging (ADL) mechanism will be triggered, and the system will reduce counterparty positions according to priority to complete the final liquidation.
Users can check the Insurance Fund page to view the balance and historical changes for each settlement currency.

 

3. Bankruptcy Price and Liquidation Mechanism

The bankruptcy price determines the maximum loss a user can bear during liquidation and serves as the settlement reference when the Insurance Fund takes over a position.
In practice:
  • Liquidation trigger price is used to initiate liquidation.
  • Bankruptcy price locks in the user’s maximum loss.
  • Actual market liquidation price determines whether there is surplus or negative balance.
  • Any surplus goes into the Insurance Fund.
  • Negative balance is covered by the Insurance Fund.
Detailed mechanisms for liquidation and bankruptcy prices can be found on the relevant pages.

 

4. Insurance Fund Inflows and Outflows

Inflows:
  • Surplus generated when liquidation orders are executed at a price better than the bankruptcy price.
  • Capital injections by KuCoin into the Insurance Fund.
Outflows:
  • Losses incurred when handling underwater positions (actual execution price below the bankruptcy price).

 

5. Example

For example, a user holds a BTCUSDT long position of 1,000 contracts (~1 BTC), with a position margin of 1,000 USDT, opening price 40,000 USDT, and maintenance margin rate 0.4%.
  • Using the formula, the liquidation price = 40,000 × [1 − (2.5% − 0.4%)] = 39,160 USDT
  • Bankruptcy price = 40,000 × (1 − 2.5%) = 39,000 USDT
When the mark price falls to 39,160 USDT, the system will take over and start liquidation.
  • If the position is finally closed at 39,100 USDT (above the bankruptcy price of 39,000), the user’s actual loss is less than the margin. The remaining surplus will be credited to the Insurance Fund, which can offset potential losses for other positions.
  • If the position can only be closed at 38,850 USDT (below the bankruptcy price of 39,000), the user’s margin (1,000 USDT) is insufficient to cover the actual loss, resulting in a 150 USDT negative balance. This shortfall is covered by the Insurance Fund to ensure the user does not suffer additional losses.

 

6. Insurance Fund Balance and How to View

Users can view on the KuCoin Futures Insurance Fund page:
  • Current balance of the Insurance Fund for each settlement currency
  • Historical change records
  • Daily balance updates after settlement (as displayed on the page)
Note: The risk level differs for each contract, and its impact on the Insurance Fund is calculated independently. The Insurance Fund is displayed by currency.

 

7.Risk Notice

The Insurance Fund does not guarantee protection against all extreme market risks and cannot completely prevent the Automatic Deleveraging (ADL) mechanism from being triggered. In cases of extreme price volatility, severely insufficient liquidity, or abnormal market conditions, the following may still occur:
  • The Insurance Fund may not fully cover negative balances
  • Automatic Deleveraging (ADL) may be triggered
  • Abnormal market price jumps may occur
Users are advised to manage their positions according to their own risk tolerance, set reasonable leverage, and avoid high-risk operations.

KuCoin Futures Guide:

Website Version Tutorial

App Version Tutorial

 

Thank you for your support!

KuCoin Futures Team

 

Note: Users from restricted countries and regions cannot open futures trading.