Usually, investors around the world who own conventional securities, such as bonds or stocks, have insurance backing from either their national governments (varies according to your country) or their private insurance policies. However, crypto investors do not automatically have those same protections.
That’s where our crypto-insurance steps in to provide cryptocurrency owners with protection for their investments.
What are insurance funds?
Insurance funds are essentially pools of funds from fees of non-bankrupt users to cover the losses of bankrupt users.
When the final closing price is higher than the bankruptcy price in the market, the remaining balance is added to the insurance funds.
When the final closing price is lower than the bankruptcy price in the market, a contract loss occurs and the insurance funds are used to cover the losses. When the funds are insufficient, ADL kicks in to cover the remaining losses.
When does a Trader go ‘bankrupt’?
When a trader’s balance goes negative, or lower than 0 USDT in his account even after all available positions are liquidated.
What is a ‘Bankruptcy price’?
A bankruptcy price is different from a Liquidation price.
The liquidation price is the price where your position will be closed & liquidation will be executed. This price is always just before the bankruptcy price is reached.
The bankruptcy price is the exact price where the trader will lose all of his collateral due to losses.
What Doesn't Our Crypto Insurance cover?
We won’t cover direct hardware loss and damage and transfer of cryptocurrency to a third party. Plus, it won’t protect against disruption or failure of the blockchain underlying the asset.