Bayse uses several risk management systems to help maintain a stable and fair trading environment during periods of market volatility.
Two important mechanisms are the Insurance Fund and Auto-Deleveraging (ADL).
What Is the Insurance Fund?
The Insurance Fund is a reserve that helps cover losses in rare situations where a liquidated position cannot be fully closed at its expected price.
Its purpose is to support the trading system and reduce the impact of extreme market movements.
The Insurance Fund is part of the platform’s broader risk management framework.
What Is Auto-Deleveraging (ADL)?
Auto-Deleveraging (ADL) is a last-resort mechanism used only in exceptional market conditions.
If losses from liquidated positions cannot be covered by the Insurance Fund, the system may automatically reduce certain profitable positions to maintain market stability.
This process is extremely rare and only occurs under severe market conditions.
Why Are These Systems Important?
Together, these mechanisms help:
Maintain orderly markets.
Reduce systemic risk.
Protect traders during periods of extreme volatility.
Support the long-term stability of the perpetual trading platform.
Frequently Asked Questions
Will ADL affect every trader?
No.
ADL is only considered under exceptional market conditions and typically affects a limited number of positions based on the platform’s risk management rules.
Is the Insurance Fund the same as my account balance?
No.
The Insurance Fund is a platform-level protection mechanism and is separate from user account balances.