> For the complete documentation index, see [llms.txt](https://nfex.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://nfex.gitbook.io/docs/nfex-perpetual-guide/insurance-fund.md). # Insurance Fund ## What are insurance funds Insurance funds serve as a safeguard when liquidation occurs, acting as a capital buffer that keeps NFEX solvent and fair. These funds provide pools of assets that protect bankrupt traders from losing more while ensuring that winning traders always receive their full profits. NFEX utilizes insurance funds to prevent[ Auto-Deleveraging](/docs/nfex-perpetual-guide/auto-deleveraging-adl.md) of traders' positions. The balance of insurance funds can grow from successful liquidation orders that are executed in the market at a price better than the bankruptcy price. ## How do insurance funds work When a user's account equity falls to or below the maintenance margin, the account is liquidated, and if the position fails to be liquidated, the account is declared bankrupt, resulting in negative equity. To cover the losses and balance the account back from negative to zero, NFEX will utilize the Insurance Fund Protocol to take over the unfilled positions and spend assets from the insurance fund pool. If the assets in the NFEX insurance fund pool are depleted, and the insurance fund protocol is unable to accept positions from the liquidation engine, auto-deleveraging (ADL) will occur. {% hint style="info" %} **NOTE:** At NFEX, all NFT perpetual contracts share the same insurance fund. {% endhint %} {% hint style="success" %} ## **Join Our Community** * **Twitter**: * **Discord**: * **Medium**: [https://medium.com/@nfex.official](https://medium.com/@nfex.official/) {% endhint %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://nfex.gitbook.io/docs/nfex-perpetual-guide/insurance-fund.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.