Risk Protection Fund

The risk protection fund is a safety mechanism designed to protect bankrupt traders from adverse losses and ensure that profitable traders receive their full profits.

The main purpose of Venkate's risk protection fund is to reduce the occurrence of counterparty forced liquidations. When a counterparty is forcibly liquidated, the position of the other trader is automatically liquidated to fill the position of the bankrupt trader.

In these situations, highly leveraged, profitable positions are more likely to encounter automatic deleveraging. The risk protection fund uses the margin fees of non-bankrupt users to cover the losses of bankrupt users (negative balance accounts) to address this issue.