# 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. ](https://medium.com/derivadex/what-is-an-insurance-fund-49410775d41e)