The risk protection fund is designed to make up for the loss caused when the client's account assets are below zero, and the extra fees paid by non-bankrupt liquidation users will be injected into the risk protection fund. The main purpose of the risk protection fund is to reduce the occurrence of counterparty liquidation.
- In the event of a user's position loss, that is, after the user is forced to close the position, there is no remaining funds in the account or the forced liquidation cannot be performed, Bibox will take over the remaining position on the user's account.
- In this case, Bibox will use the risk protection fund for reverse liquidation. When the risk protection fund is not enough to take over the remaining positions of the liquidated user, the counterparty will automatically liquidate the position.
Rules of Risk Protection Fund：
The risk protection foundation checks the maximum net nominal position, and its nominal value cannot exceed the preset maximum position; in general, the default is 100% of the risk protection fund. Any position that exceeds the maximum notional value will be converted to automatic deleverage. The Risk Protection Foundation will deduct positions according to a preset algorithm. At this time, all situations that usually require the intervention of the risk protection fund will be turned into the counterparty to automatically ADL.
In Bibox contracts, coin margined perpetual contracts have their own risk protection funds, and USDT perpetual contracts share the same risk protection fund.