Can an Exchange Distribute Excess Insurance Fund Back to Traders? ⎊ Path

Can an Exchange Distribute Excess Insurance Fund Back to Traders?

Yes, some exchanges have policies to periodically distribute excess capital from an oversized insurance fund back to traders, often through a mechanism like a buyback and burn of the exchange's native token or a direct rebate. This is done to maintain an optimal fund size and return value to the community.

What Is the Difference between “Virtual Size” and “Actual Size” of a Transaction?

How Do Regulatory Fees or Exchange Rebates Factor into an SOR’s Decision Logic?

How Can Future Cash Flows of the Existing Business Be Linked to the Token’s Utility?

How Does Increased Margin Requirements Due to Volatility Affect the Return on Arbitrage Capital?

How Can a Protocol Use Deflationary Mechanisms (Like Token Burns) to Counteract Inflation?

Can an Exchange Contribute Its Own Capital to the Insurance Fund?

Can a Trader Use Excess Margin to Open New Positions?

How Does a Logarithmic Return Differ from a Simple Return?

Glossar

Oversized Insurance Fund

Fund ⎊ An oversized insurance fund is a risk management mechanism where a derivatives exchange maintains a substantial pool of capital specifically to cover losses from liquidations that cannot be fully executed at the liquidation price.