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Does the Funding Rate Contribute Directly to the Insurance Fund?

No, it is a peer-to-peer payment for price stability; the insurance fund is financed by excess margin from liquidations.
Greeks.Live22.11.25

Does the Funding Rate Contribute Directly to the Insurance Fund?

No, the funding rate does not contribute directly to the insurance fund. The funding rate is a peer-to-peer payment between traders (longs pay shorts or vice versa) and is designed for price stabilization.

The insurance fund is funded by excess margin from successful liquidations. The two mechanisms serve distinct purposes.

Is the Funding Rate Always Paid by the Trader or Can It Be Received?
Can a Trader Withdraw Initial Margin While a Position Is Open?
How Does a Derivatives Exchange Use an Insurance Fund to Manage Liquidation Risk?
What Is an ‘Insurance Fund’ in the Context of a Crypto Derivatives Exchange?

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