FCA: BitMEX

Two major cryptocurrency derivatives exchanges, BitMEX and Deribit, witnessed significant liquidations this week. But while BitMEX recorded their all-time insurance fund, rival Deribit experienced a serious drop.

A recent incident in the cryptocurrency market has caused BitMEX's insurance fund to hit a record high of 36,493 Bitcoin (BTC). At the same time, the insurance fund held by Deribit has shrunk by nearly half.

Both trading platforms have separate insurance funds to pay the winner of a transaction when its profit is not fully guaranteed by the liquidator.

Prior to this major decline, Deribit announced that it injected an additional 500 BTC of its own into the insurance fund – which was reduced from 392 BTC on Wednesday to 198 BTC on Friday.

According to the announcement, this move is to prevent liquidation losses that deplete insurance funds and ultimately socialize among users.

“Due to high volatility, we have seen a significant impact on our BTC insurance fund. To prevent the loss of socialization, we decided to support the insurance fund and strengthen it by pumping 500 BTC of the company's money. This will return and protect customers from greater losses because the current balance is lower than that amount, ”the notice said.

Accumulated balance of Deribit's insurance fund. Source: The Block
Deribit's accumulated insurance fund. Source: The Block

While Deribit developed its insurance fund by charging fees when liquidating, BitMEX's funds increased when the liquidation was “executed at a price better than the bankruptcy price.” This means that when traders are liquidated before reaching the theoretical maximum of positions, the fund will collect the difference between the two positions.

As of the time of writing, more than $ 1.6 billion has been liquidated on BitMEX, which makes the exchange's insurance fund continue to increase in 24 hours. As Toiyeubitcoin previously reported, the BitMEX fund has only lost 1,627 BTC from March 11 to March 12 and has seen its balance increase by 7.7% since then.

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Accumulated balance of BitMEX insurance fund. Source: The Block
Accumulated balance of BitMEX insurance fund. Source: The Block

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According to The Block
Translated by ToiYeuBitcoin

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