Does the Mutualized Risk Concept Apply to Decentralized Exchanges? ▴ Learn

Does the Mutualized Risk Concept Apply to Decentralized Exchanges?

No, the traditional concept of mutualized risk, where financially strong members contribute to a shared fund, does not directly apply to fully decentralized exchanges (DEXs). DEXs often use an "insurance fund" or a mechanism for "socialized loss" where a portion of the trading fees or a penalty from liquidations is pooled to cover bad debt.

How Do CCPs Manage the Operational Risk of Accepting a Wide Variety of Collateral Assets?

Can an Exchange Switch between ADL and Socialized Loss Systems?

What Role Do Central Clearing Counterparties (CCPs) Play in Managing Collateral for Derivatives?

How Does the Lack of Traditional Regulatory Oversight Affect Crypto CCPs?