Last updated: 6 May 2025
Futures Insurance Funds are safety nets provided by Binance that limit the impact of liquidations. These protect traders from adverse losses resulting from bankrupt positions and help to ensure that the profits of in-the-money positions are paid out to the profiting traders in full.
Binance maintains several Futures Insurance Funds, and the assets of each Futures Insurance Fund may be held in one or more wallets. The coverage of each Futures Insurance Fund is calibrated by Binance. The assets of each Futures Insurance Fund is made available to cover losses arising from their respective covered categories of futures contracts. Binance may from time-to-time adjust the allocation of categories of futures contracts between the Futures Insurance Funds.
Notwithstanding the use of the term “insurance”, the Futures Insurance Funds are not insurance products, and Binance is not an insurer. The Futures Insurance Funds are designed and provided solely for the purpose of mitigating counterparty risks arising from futures liquidations, and do not guarantee users against losses. You must not rely on the Futures Insurance Funds as a substitute for your own risk management.
A trader’s position will be liquidated if the collateral made available by the trader to maintain the position is less than the margin required to maintain the position. A position will be considered bankrupt if the balance of the assets made available by the trader for that position is less than 0 following liquidation, or if the position cannot be liquidated (a “Bankrupt Position”).
To the extent possible, the Futures Insurance Funds will take over Bankrupt Positions. Any losses arising from a Bankrupt Position will be funded by the relevant Futures Insurance Fund while profits (if any) arising from a Bankrupt Position will be credited to the relevant Futures Insurance Fund.
When the unrealized loss of Bankrupt Positions taken over by the liquidation engine is larger than the available balance of the relevant Futures Insurance Fund that is allocated to that type of contract, then the liquidation engine can no longer trade that contract type and the Auto-Deleveraging (ADL) mechanism will be engaged.
The Futures Insurance Funds are not used to cover traders’ losses. Its only purpose is to cover any difference between the bankruptcy price and the execution price of the liquidation order. Traders will not get any of their losses back from a Futures Insurance Fund.
The required minimum size of each Futures Insurance Fund is calibrated to cover the losses arising from Bankrupt Positions (for the category of futures covered by the Futures Insurance Fund). The approach used to determine the required minimum size is similar to methods adopted in traditional finance futures markets (and expected by regulators of such futures markets). This approach is based on a 99.9% confidence interval and historical stressed scenarios reflecting extreme but plausible market conditions. Note that the 99.9% confidence interval is not related to the occurrence of ADL and does not mean that ADL will be, or is expected to be, avoided in 99.9% of liquidation scenarios. Please refer to “What is ADL and how does it work” for more information about ADL and how it works.
The calibration of the required minimum size of each Futures Insurance Fund will be reviewed by Binance on a quarterly basis and at times when Binance considers it appropriate in its sole discretion.
When a position is liquidated, a portion of the assets that have been made available to maintain the position will be deducted and paid to Binance as a Liquidation Clearance Fee, unless the position is a Bankrupt Position following liquidation. All or part of the Liquidation Clearance Fees paid by traders with respect to non-bankrupt positions subject to liquidation may be allocated to maintain the Futures Insurance Funds, as Binance considers appropriate.
In addition, when the Futures Insurance Fund takes over a Bankrupt Position, the profit (if any) arising from the Bankrupt Position will be credited to the relevant Futures Insurance Fund.
The size of each Futures Insurance Fund will be monitored frequently. If the size of any Futures Insurance Fund is less than the required minimum, Binance will contribute additional assets to the Futures Insurance Fund. To the extent that Binance considers necessary or appropriate, assets may be rebalanced between the various Futures Insurance Funds to ensure that each Futures Insurance Fund is at least equal to the required minimum.
If the size of the Futures Insurance Funds exceeds the required minimum determined in a periodic review, any funds in excess of the required minimum may be deployed by Binance for other purposes as it considers appropriate in its sole discretion.
You can access the Futures Insurance Funds balance (USDT or USDC) of all futures contracts by clicking [Data] - [Futures Data] - [Insurance Fund History] on the Binance Futures trading interface.
Alternatively, you can directly visit [Insurance Fund History].
If the losses arising from a Bankrupt Position cannot be funded by the relevant Futures Insurance Fund, then Binance will be unable to take over such Bankrupt Positions. In this case, the matching engine will automatically liquidate the Bankrupt Positions and some opposing non-bankrupt trader’s positions. This process is called “Auto-Deleveraging” (ADL). During this process, Binance will liquidate the bankrupt trader’s positions and select opposing users in order of leverage and profitability, from which positions are automatically liquidated to cover for the losing bankrupt trader’s position. Please refer to “What is ADL and how does it work” for more information about ADL and how it works.
Binance offers USDT-margined and USDC-margined futures contracts under USDⓈ-M Futures. The following is the current composition of Futures Insurance Funds for USDⓈ-M contracts:
Binance may allocate futures contracts to different Futures Insurance Fund accounts and establish new Futures Insurance Fund accounts from time-to-time, as it considers it appropriate in its sole discretion. Users may check each futures contract’s respective Futures Insurance Fund balance here.
Binance also offers coin-margined contracts. All coin-margined contracts which use the same cryptocurrency asset as collateral will share one single Futures Insurance Fund. For example, BTC coin-margined perpetuals and delivery contracts will share the same Futures Insurance Fund.
