Phemex uses an Insurance Fund to prevent your positions from becoming Auto-Deleveraged. The Insurance Fund is used to alleviate unfilled liquidation orders on the platform before they are taken over by the auto-deleveraging system. Due to how Phemex’s platform is structured, the exchange does not require payments from traders who have negative account balances when they are liquidated in a leveraged trade. Instead, the exchange uses its Insurance Fund to ensure that the winning party of a trade receives their expected profits even when the losing party’s funds do not cover the winning party’s gains. The Fund grows from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that specific position.