Bitget futures: Understanding Insurance Fund

What is Insurance Fund?

Insurance Fund is a capital buffer set up by Bitget to help manage extreme market conditions — such as sharp price swings or liquidation shortfalls. Its primary role is to safeguard both the platform and its users by covering losses when a user's account balance is insufficient, thereby preventing broader systemic risks.

Put simply, the Insurance Fund acts as a shared safety net, cushioning the impact of market volatility and helping to maintain a stable trading environment.

How Insurance Fund works

Insurance Fund operates through a mechanism designed to offset losses during liquidation and reduce systemic impact. Here's how it works:

1. After liquidation is triggered: When a user's position hits the liquidation threshold due to market volatility, the system automatically liquidates the position, using the user's remaining assets to cover losses.

2. Covering loss: If the remaining assets after liquidation are insufficient to cover the full loss (i.e., a collateral shortfall), Bitget will draw from the Insurance Fund to make up the shortfall and ensure the protection of other users' funds.

3. Fund pool management:

• If the liquidation is completed and the remaining margin equity in the cross-margin account is positive, or if the isolated position is closed at a better price than the bankruptcy price, the remaining margin will be transferred into Bitget Insurance Fund.

• If a user's liquidation is completed and the remaining margin in the cross margin account is negative, or if the isolated position is closed below the bankruptcy price, the Insurance Fund will be used to cover the losses.

Insurance Fund case examples

Background

Suppose that User A holds BTCUSDT perpetual futures on Bitget in isolated margin mode with the following parameters:

• Entry price: 50,000 USDT

• Position direction / size: Long / 1 BTC

• Leverage: 10×

• Margin: 5000 USDT

• Liquidation price: 45,100 USDT

Scenario 1: Normal liquidation — remaining margin added to Insurance Fund

1. Market volatility triggers liquidation

￮ BTC falls to 45,100 USDT, triggering liquidation

2. System auto-liquidates the position

￮ Loss calculation:

▪ Loss = 50,000 × (1 − 45,100 ÷ 50,000) = 4900 USDT

￮ Remaining margin after deducting losses:

▪ 5,000 − 4,900 = 100 USDT

3. What happens to the remaining funds?

￮ Since there's still remaining margin, the 100 USDT is automatically transferred to the Insurance Fund, helping strengthen platform stability.

Scenario 2: Collateral shortfall —Insurance Fund covers the shortfall

1. Liquidation fails due to extreme market conditions

￮ BTC price crashes to 44,200 USDT due to low market liquidity.

2. Collateral shortfall calculation

￮ Total loss = 50,000 × (1 − 44,200 ÷ 50,000) = 5800 USDT

￮ The margin is only 5000 USDT and cannot cover all losses, resulting in a shortfall of 800 USDT.

3. Insurance Fund intervention

￮ The platform automatically withdraws 800 USDT from the Insurance Fund to cover collateral shortfalls, ensuring the safety of other users' funds.

Scenario	Liquidation result	Fund flow
Normal liquidation	100 USDT remaining	Added to Insurance Fund
Collateral shortfall (extreme)	Loss exceeds margin, shortfall of 800 USDT	Insurance Fund covers 800 USDT

How to view the platform's Insurance Fund balance

Bitget offers a transparent way for users to view the platform's Insurance Fund balance at any time. Here's how:

1. Log in to Bitget website or open the Bitget app.

2. Go to the Futures page, click Info at the top of the page, and select Futures trading data from the dropdown menu.

3. Select Insurance Fund on the page to view the current fund pool balance and historical changes, or simply click here. Checking the balance regularly helps you better understand Bitget's risk management capability and trade with greater confidence on the platform.

What if the Insurance Fund is depleted？

If a large number of positions are liquidated simultaneously and losses exceed the capacity of the Insurance Fund, the fund may become depleted. In such cases, the ADL mechanism will be triggered, meaning the profits of other traders may be used to offset the shortfall. Learn more here: Introduction to Auto-deleveraging (ADL) .