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.
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Happy Trading,
The WEEX Team
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Sign up for a WEEX account now: https://www.weex.com/register
[Supported Platforms]:
CoinMarketCap| Feixiaohao| Cryptowisser.com| Coingecko| Coincarp