Insurance fund

The DerivaDEX Insurance Fund is a reserve designed to protect traders from losses due to unexpected liquidations or extreme market events. It serves as a safeguard to cover negative balances when a trader's position is liquidated, ensuring that other users are not affected (minimizing the occurence of auto de-leveraging, or ADL).

The fund is maintained by collecting all USDC trading fees and liquidation penalties, and it is managed through the DerivaDAO governance system.

For more information on the insurnance fund, see this article.