Which Exchanges Are Known for Historically Using a Socialized Loss System?
Early-stage or smaller crypto futures exchanges sometimes utilized the socialized loss model before transitioning to the more robust insurance fund model. Notably, some of the very first crypto derivatives platforms used this system to cover deficits before the industry standardized on the insurance fund as the primary defense mechanism against under-collateralized positions.
Glossar
Socialized Loss
Mechanism ⎊ Socialized loss, within cryptocurrency derivatives and options trading, describes the distribution of losses across a broader participant base than those directly holding a losing position, often amplified by leveraged exposure and cascading liquidations.
Socialized Loss Model
Mechanism ⎊ A Socialized Loss Model within cryptocurrency derivatives represents a risk-sharing protocol where losses incurred during adverse market events are distributed amongst a wider participant base, rather than being solely borne by individual traders or a centralized counterparty.
Crypto Derivatives Platforms
Infrastructure ⎊ Crypto derivatives platforms provide the essential infrastructure for trading complex financial instruments based on digital assets.
Futures Exchanges
Platform ⎊ Futures exchanges serve as centralized, high-throughput trading platforms where participants execute standardized derivatives contracts on underlying assets, prominently including cryptocurrencies.