๐Ÿ“–JOJO Insurance Fund

Introduction to JOJO Insurance Fund

What is Insurance Fund?

Insurance Funds are designed to provide a safety net for traders who are facing bankruptcy due to adverse losses. Additionally, they ensure that the profits of winning traders are paid in full. The main goal of an insurance fund is to prevent counterparty liquidations, where opposing traders' positions are automatically liquidated to cover the position of a bankrupt trader. This process often results in profitable positions with high leverage receiving counterparty liquidations. By utilizing collateral from non-bankrupt users' fees, Insurance Funds can cover the losses of bankrupt users and negative balance accounts, thereby resolving this issue.

How Does JOJO Insurance Fund Work?

If a user undergoing liquidation has a balance of less than 0 USDT once all of their positions have been liquidated, or is otherwise incapable of liquidating their positions, they will be deemed bankrupt, and JOJO will assume control of the remaining positions. JOJO's insurance fund will be used to pay for the risk of the user's bankruptcy that may occur in extreme market conditions.

An insurance account is used to store the insurance fees paid by the users who are being liquidated. The current account is an EOA account managed by the JOJO team, and in the future, the insurance account will be upgraded to a smart contract and the Insurance Fund will be realized a fully decentralization.

In the current stage, the insurance account is shared by perpetual contracts across various trading pairs. In the event that the account does not contain adequate funds to offset bad debt, JOJO users will still be able to conduct trades, with the insurance fund covering the shortfall until it is fully resolved.

You can access the insurance fund balance by visiting JOJO insurance Fund.

Insurance Fee

Insurance fees are incurred for each liquidation and any bad debts will be covered by the insurance account. After liquidation, the user's credit balance may exist in the following scenarios:

  • If the credit amount is negative, the insurance account will be used to offset the bad debts.

  • If the user has remaining credits but insufficient funds to cover the insurance fee, the insurance will claim all remaining credits.

  • If the user has sufficient credits to pay the insurance fee, any remaining credits will be refunded.

insuranceFee=LiquidatorCreditChangeโˆ—insuranceFeeRate

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