{"id":17766,"date":"2026-10-30T10:13:37","date_gmt":"2026-10-30T02:13:37","guid":{"rendered":"https:\/\/www.btse.com\/blog\/?p=17766"},"modified":"2026-10-30T10:13:37","modified_gmt":"2026-10-30T02:13:37","slug":"btse-insurance-fund-explained","status":"publish","type":"post","link":"https:\/\/www.btse.com\/blog\/btse-insurance-fund-explained\/","title":{"rendered":"What Is the BTSE Insurance Fund and How Does It Protect You?"},"content":{"rendered":"

The BTSE Insurance Fund is designed to cover the gap when a futures position is liquidated but cannot be closed at its bankruptcy price. It is funded by money from liquidations that close at a better price than the bankruptcy price, and helps protect profitable traders from aggregated losses from other traders. This guide explains when it applies and what it does not do.\u00a0<\/span><\/p>\n

Why do futures exchanges need an insurance fund?<\/span><\/h2>\n

Futures trading lets you use <\/span><\/span>leverage<\/span><\/a><\/span>, which means controlling a larger position than your own money would allow. Losses grow faster too. When a position loses most of its margin, the exchange closes it automatically. This is called <\/span><\/span>liquidation<\/span><\/a><\/span>. The price where the margin is fully used up is the bankruptcy price.<\/span><\/span><\/p>\n

Markets move fast, so a liquidation does not always close at that price. For example, say a position’s bankruptcy price is 100 USDT, but the market will only pay 98 USDT. That 2 USDT gap per unit still has to be absorbed by someone. An insurance fund is a reserve that an exchange builds up to help with these gaps, so they do not fall straight onto other traders. It does not remove market risk.\u00a0<\/span><\/p>\n

When does BTSE’s Insurance Fund step in?<\/span><\/h2>\n

The Insurance Fund may step in when a liquidation order cannot be filled at the bankruptcy price. The sequence works like this:<\/span><\/p>\n

    \n
  1. A position’s margin runs low and the position is liquidated.<\/span><\/li>\n
  2. The liquidation engine closes the position at the bankruptcy price, then tries to cover it in the market.<\/span><\/li>\n
  3. If the order cannot fill at the bankruptcy price and the fund has enough balance, the order price can be moved by up to 1.0% to help it fill.\u00a0<\/span><\/li>\n
  4. If the order fills at a better price than the bankruptcy price, the leftover amount goes into the fund.\u00a0<\/span><\/li>\n
  5. If the order is still not filled after the 1.0% move, Auto-Deleveraging (ADL) is triggered.\u00a0<\/span><\/li>\n<\/ol>\n


    \nFor the full rules, see our <\/span><\/span>    BTSE Support Center Insurance Fund article<\/span><\/a><\/span>.<\/span><\/span><\/p>\n

    Where does the money come from?<\/span><\/h2>\n

    The fund is built from liquidation surpluses. Whenever a liquidation closes at a better price than the bankruptcy price, the leftover amount is added to the fund. Over time, this builds a platform balance that can be used to help harder-to-fill liquidations.\u00a0<\/span><\/p>\n

    What happens if the fund is not enough?<\/span><\/h2>\n

    If the order is still not filled after the 1.0% move, Auto-Deleveraging (ADL) is triggered automatically. ADL closes the liquidated position against a winning trader’s position instead.<\/span><\/p>\n

    For you as a user, this means that if you hold a profitable position, it may be closed earlier than you planned. The fund is designed to reduce how often this happens, but it cannot rule it out. ADL also means a liquidated trader’s margin balance never goes negative. For how ADL works, see the <\/span><\/span>BTSE Support Center ADL explanation<\/span><\/a><\/span>.\u00a0<\/span><\/span><\/p>\n

    Can I see the Insurance Fund balance?<\/span><\/h2>\n

    BTSE does not currently publish a live Insurance Fund balance on a public page. For the rules on how the fund works, see the <\/span><\/span>Support Center article<\/span><\/a><\/span>.\u00a0<\/span><\/span><\/p>\n

    The Insurance Fund covers gaps in futures liquidations. How BTSE safeguards your assets is a separate question, covered in<\/span><\/span> Proof of Reserves 2026: A Deep Dive into BTSE’s Security Architecture<\/span><\/a><\/span>.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    The BTSE Insurance Fund is designed to cover the gap when a futures position is liquidated but cannot be closed at its bankruptcy price. It is funded by money from liquidations that close at a better price than the bankruptcy price, and helps protect profitable traders from aggregated losses from other traders. This guide explains […]<\/p>\n","protected":false},"author":1,"featured_media":17767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1218],"tags":[1296,1297,1291,1292,1294,1295,1293],"class_list":["post-17766","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-security","tag-auto-deleveraging-adl","tag-bankruptcy-price","tag-btse-insurance-fund","tag-btse-insurance-fund-explained","tag-how-does-a-crypto-insurance-fund-work","tag-insurance-fund-liquidation","tag-what-is-an-insurance-fund-in-crypto-futures"],"yoast_head":"\nWhat Is the BTSE Insurance Fund and How Does It Protect 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