Due to the high volatility of the cryptocurrency market and the unrecoverable losses caused by liquidation, trading platforms universally implement a Risk Reserve Fund system. This mechanism is designed to reduce the risk of negative account balances and help maintain the platform’s overall stability.

How the Risk Reserve Fund works:

After a forced liquidation is triggered and processed:

• If the account has remaining positive equity, the residual funds will be contributed to the Risk Reserve Fund.
• If the account has a negative balance (deficit), the loss will be covered by the Risk Reserve Fund.

Important note:

The actual execution price during liquidation may differ from the trigger price due to market volatility and liquidity conditions. As a result, the final amount added to or deducted from the Risk Reserve Fund might not exactly match the calculated value at the time the liquidation was triggered.