Insurance Fund
50% of all the transactions fee go to the Insurance Fund. The insurance fund is very important for the protocol’s stability as it absorbs unforeseen volatility. Two major cases where this would be utilized are-
- 1.Delayed Liquidation- During extreme market volatility liquidation bots might not liquidate positions below maintenance margin on time.
- 2.Negative balance due to Funding Payments- vAMM pays the funding payment on each trade as it is the universal counterparty in the Ariel design. The protocol might experience a negative balance in a short timeframe. However, in the long horizon positive and negative payments would cancel out each other.
Last modified 1yr ago