Derify Protocol Documents
  • About Derify
    • General
    • Trading
    • Margin Token
    • Trading Token
    • Position Mining
    • Brokers
    • Grant Program
    • eDRF & Governance
    • Bond
    • Insurance, Buyback and Burn
    • Other
  • Getting Started
    • Tutorial
      • Connect Wallet
      • Choose Broker
      • Faucet
      • Deposit & Withdraw
      • Open Positions
      • Close Positions
      • Earn
      • Apply For Broker License & License Extention
      • Grant
    • Dictionary
  • DRF Token
    • General
    • Distribution & Release
  • Derify DAO
    • Overview
    • DAO Contributor
  • Whitepaper
    • Introduction
    • Mechanism
      • Contract Calculation
      • hAMM
      • Position Mining
      • Index Price
      • Risk Factor
        • Risk Exposure
        • Risk Ratio
      • Risk Control
        • Position Change Fee
        • Position Restriction
        • Auto Deleverage and Mandatory Liquidation
        • Dynamic Mining Reward
      • Risk Compansation
        • Insurance Pool
        • Bond and Buyback Fund
    • Implementation
      • Transaction Order
      • Side-chain, Rollup and Cross Chain
      • Against Front-running Attack
      • Against Flash-loan Attack
    • Tokenomics
      • DRF Token
      • Trading Fee
      • eDRF Token
      • bToken
    • Community and Governance
      • Broker
      • Developers and Other Members
      • DAO Governance
    • Roadmap
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  1. Whitepaper
  2. Mechanism
  3. Risk Compansation

Insurance Pool

上一页Risk Compansation下一页Bond and Buyback Fund

最后更新于1年前

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Derify protocol has an insurance pool for cash-out demands that excess the liquidity pool of a derivative.

The cash-out rules of the insurance pool are as follows:

The system net profit/loss is equal to the difference between the capital balance of the liquidity pool and the margin balance of all users. If the difference is positive, which represents the net profit of the system and the net loss of the user; if the difference is negative, which represents the net loss of the system and the net profit of the user.

  • When the system has a net loss (system PnL negative) and the user withdraws funds, the insurance pool will inject funds into the liquidity pool in proportion to the system net loss

  • When the system has a net loss (system PnL negative) and the user deposits funds, the liquidity pool will inject funds into the insurance pool in proportion to the system net loss

  • When the system has a net profit (system PnL positive) and the user withdraws money, the liquidity pool will inject funds into the insurance pool in proportion to the system net profit

The income of the insurance pool includes:

  • Shared net loss withdrawals from traders (Ycompensation<0Y_{compensation}<0Ycompensation​<0)

  • Shared net profit deposits from traders (Ycompensation>0Y_{compensation}>0Ycompensation​>0)

  • A certain percentage of the trading fee

  • Margin residuals from forced liquidations

  • Revenue from inactive brokers

Funds in the insurance pool are used for:

  • Shared net profit withdrawals from traders (Ycompensation>0Y_{compensation}>0Ycompensation​>0)

  • Overflow to the buyback fund (bond repayment is prioritized)

In the long term, the probability of traders' net profit and net loss are equal, but as trading fees are constantly injected into the insurance pool, the insurance pool will experience net inflow and grow bigger over time.

The insurance pool is the primary risk compensation mechanism for the Derify Protocol.