As the cryptocurrency market continues to grow rapidly, derivatives trading—particularly Futures—has become a primary tool for investors to engage in leveraged strategies. However, theAs the cryptocurrency market continues to grow rapidly, derivatives trading—particularly Futures—has become a primary tool for investors to engage in leveraged strategies. However, the
Learn/Trading Guide/Futures/What is the... User Funds

What is the MEXC Insurance Fund? Unlocking the Key to How MEXC Safeguards User Funds

Jul 16, 2025MEXC
0m
#Futures
FUND
FUND$0.01105--%
MAY
MAY$0.02095+2.69%
Notcoin
NOT$0.0006187-1.02%
Belong
LONG$0.002713-6.86%
Moonveil
MORE$0.004602+1.67%

As the cryptocurrency market continues to grow rapidly, derivatives trading—particularly Futures—has become a primary tool for investors to engage in leveraged strategies. However, the high-volatility and high-leverage nature of these markets also brings significant risk. During extreme market conditions, users may not only face liquidation, but also experience negative balance, where losses exceed their initial margin. In such cases, the Insurance Fund plays a critical role as a risk buffer, helping protect trader interests and maintain platform stability.

1. What Are Liquidation and Negative Balance?


1.1 What Is Liquidation?


Liquidation occurs when a user's position incurs losses that bring their margin balance below the required maintenance margin. To prevent further risk, the trading platform forcefully closes the position. For example, if a user opens a high-leverage long position and the market price suddenly drops, their margin may become insufficient to cover the losses. In this case, the system will automatically intervene and liquidate the position to prevent further liabilities.

1.2 What Is Negative Balance?


While similar in definition to liquidation, negative balance events have more severe consequences. A negative balance event occurs when, after the system takes over and forcefully liquidates a position, extreme market volatility or insufficient liquidity causes the final execution price to be worse than the bankruptcy price—meaning the actual loss exceeds the margin held for the position. For example, if an investor shorts Bitcoin with a liquidation price of 30,000 USDT, and the market suddenly surges past 30,000, there may be few orders near that price in the order book. If the system fails to fill the liquidation quickly or at favorable prices, and the position is settled at a worse price than the bankruptcy threshold, the resulting loss may exceed the original margin. This is a negative balance event. In such cases, the excess loss is covered by the MEXC Insurance Fund Account.

2. What Is the MEXC Insurance Fund Account?


The MEXC Insurance Fund Account is a reserve pool designed to help protect traders from excessive losses in derivatives trading. When a position is liquidated and the loss exceeds the margin, the Insurance Fund compensates for the shortfall.

The Insurance Fund grows from the residual value generated when liquidation orders are filled on the market at prices better than the bankruptcy price. When market liquidity is sufficient, liquidation orders can be filled at or above the bankruptcy price, generating surplus value. This surplus is then contributed to the Insurance Fund to offset future negative balance events.

Through this protective mechanism, the MEXC Insurance Fund Account acts as a strong line of defense for investors. Even under extreme market conditions, it provides a safety net that helps limit losses and maintain the platform’s financial stability.

3. Transparency and Access to the Insurance Fund Account


To ensure the transparency and credibility of the Insurance Fund Account, MEXC provides users with an easy and accessible way to view the data.

Users can log in to the official MEXC website and navigate to Futures → Information → Insurance Fund Account, or simply click this link to view the current and historical balances of the Insurance Fund for each trading pair. The data is updated regularly and is fully open and transparent.



4. Why Is the MEXC Insurance Fund Account So Important?


The MEXC Insurance Fund Account plays a critical role in the Futures market. It compensates users for negative balance events, fills funding gaps, and helps prevent platform insolvency or debt recovery actions. When a counterparty’s position is liquidated, the Insurance Fund ensures that profitable traders receive their full entitled earnings without being impacted by losses on the other side. It also reduces the frequency of Auto-Deleveraging (ADL), preserving position control for profitable traders. In addition, a well-funded Insurance Fund strengthens platform stability, boosts user confidence, and enhances MEXC’s overall competitiveness.

5. Conclusion


The risks of liquidation and negative balance events in cryptocurrency futures trading are significant challenges that every investor must face. By understanding their definitions and consequences—as well as the protective mechanism of the MEXC Insurance Fund—investors can better navigate these risks and safeguard their rights and assets. However, all investments carry risk, and entering the market should be done with caution. While pursuing high returns, investors should remain vigilant and rational to avoid potential losses.

As the cryptocurrency market continues to evolve and mature, MEXC will also continue to enhance its risk management systems to provide a safer and more stable trading environment for users. At present, the crypto market is displaying unprecedented energy and potential. Futures trading, as a key component, offers investors diversified profit opportunities and vast growth potential. With its deep industry expertise, cutting-edge technology, and user-centric services, MEXC has become the platform of choice for many futures traders. We welcome you to join MEXC and explore the evolving world of crypto derivatives—seize emerging opportunities, stay ahead of market trends, and work toward sustainable wealth creation in a secure and professional trading environment.


Disclaimer: The information provided in this material does not constitute advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it serve as a recommendation to purchase, sell, or hold any assets. MEXC Learn offers this information for reference purposes only and does not provide investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. MEXC is not responsible for users' investment decisions.

Popular Articles

How to Use MEXC Vouchers? Get the Complete Operation Guide and Strategy

How to Use MEXC Vouchers? Get the Complete Operation Guide and Strategy

MEXC is one of the world's leading digital asset trading platforms, providing users with various ways to reduce transaction costs, one of which is to use MEXC vouchers. By using MEXC vouchers, you can

What Is Staking Crypto and How Does It Work? Complete Beginner's Guide

What Is Staking Crypto and How Does It Work? Complete Beginner's Guide

Have you ever wondered if your cryptocurrency could work for you while you sleep?Staking crypto offers exactly that opportunity—a way to earn passive income simply by holding certain digital assets.Th

What is Cysic (CYS)? Complete Guide to the ComputeFi Revolution in Decentralized Computing

What is Cysic (CYS)? Complete Guide to the ComputeFi Revolution in Decentralized Computing

The computing landscape faces a critical bottleneck: powerful resources remain locked in centralized platforms while blockchain applications desperately need accessible, verifiable computation. Cysic

How to Short Crypto on MEXC? Complete Guide for Beginners

How to Short Crypto on MEXC? Complete Guide for Beginners

Key TakeawaysShorting Basics on MEXC Shorting crypto on MEXC means borrowing and selling an asset you don't own, then buying it back at a lower price to profit from price declines. MEXC offers futures

Hot Crypto Updates

How to Buy Midnight (NIGHT) on MEXC: Complete 2026 Tutorial

How to Buy Midnight (NIGHT) on MEXC: Complete 2026 Tutorial

Key Takeaways MEXC Exchange is the best platform to buy NIGHT tokens, offering 100% reserve guarantee and zero-fee tradingRegistering a MEXC account takes only 3-5 minutes, supporting 100+ payment met

NIGHT Token Price Prediction and 2025-2030 Investment Outlook: Deep Dive into Midnight Market Performance

NIGHT Token Price Prediction and 2025-2030 Investment Outlook: Deep Dive into Midnight Market Performance

Key Takeaways NIGHT token launched on December 9, 2025, with price plummeting from $0.105 to $0.0232 on day one, down 77.92%Current crypto price approximately $0.0232, market cap $385 million, ranked

Midnight (NIGHT) In-Depth Analysis: The Privacy Revolution in Cardano Ecosystem

Midnight (NIGHT) In-Depth Analysis: The Privacy Revolution in Cardano Ecosystem

Key Takeaways • Midnight (NIGHT) is a fourth-generation blockchain project led by Cardano founder Charles Hoskinson, focusing on privacy protection technology• Utilizes zero-knowledge proof (zk-SNARKs

Bitcoin Price Alert: Current Rally May Crash to $74K | 2026 Selling Strategy Guide

Bitcoin Price Alert: Current Rally May Crash to $74K | 2026 Selling Strategy Guide

Key Takeaways Short-term Rally: Bitcoin price rebounded from below $90K to above $94K recently Bearish Signals: Technical analysis shows clear bear flag formation and WXY correction pattern Critical L

Trending News

How to earn from cloud mining: IeByte’s upgraded auto-cloud mining platform unlocks genuine passive earnings

How to earn from cloud mining: IeByte’s upgraded auto-cloud mining platform unlocks genuine passive earnings

The post How to earn from cloud mining: IeByte’s upgraded auto-cloud mining platform unlocks genuine passive earnings appeared on BitcoinEthereumNews.com. contributor Posted: September 17, 2025 As dig

The HackerNoon Newsletter: Hard Problems Are Easier, Once You Think Like This (12/10/2025)

The HackerNoon Newsletter: Hard Problems Are Easier, Once You Think Like This (12/10/2025)

How are you, hacker? 🪐 What’s happening in tech today, December 10, 2025? The HackerNoon Newsletter brings the HackerNoon homepage straight to your

The Bistro Group, going loca(l)

The Bistro Group, going loca(l)

THE RETURN of Krazy Garlik under The Bistro Group’s portfolio signifies Bistro’s respect for local culture and its motivation to do more in the local scene (as opposed to their forte, bringing in inte

Strategy blasts MSCI plan to drop crypto treasuries from indexes

Strategy blasts MSCI plan to drop crypto treasuries from indexes

Strategy has planted a flag against MSCI’s proposal to remove digital asset treasury companies (DATs) from its Global Investable Market Indexes. According to the company, the wiser course for MSCI, fo

Related Articles

Usage Instructions for Futures Bonus, Position Airdrop, and Vouchers

Usage Instructions for Futures Bonus, Position Airdrop, and Vouchers

1. Futures Bonus Usage Instructions1.1 Futures Bonus Rules1) Futures bonuses can only be used for Futures trading. Profits generated from the bonus are withdrawable, but the bonus itself is non-withdr

Futures Trading VIP Experience Card - Enjoy 0.01% Taker Fees, The Lowest in the Industry!

Futures Trading VIP Experience Card - Enjoy 0.01% Taker Fees, The Lowest in the Industry!

Dear MEXCers,Looking for an even better VIP trading experience? Look no further!We're excited to welcome VIP users from other exchanges with our exclusive Futures VIP Experience Card. Eligible users c

What is MEXC Futures Earn?

What is MEXC Futures Earn?

1. What is MEXC Futures Earn?Futures Earn is a financial product offered by MEXC for Futures users. Once activated, eligible funds in your Futures account will automatically enroll in this exclusive E

How to Trade Stock Futures on MEXC

How to Trade Stock Futures on MEXC

Crypto-Based Stock Futures are financial derivatives that integrate U.S. equities (stocks of publicly listed U.S. companies) with the cryptocurrency market through Futures-based trading. These instrum

Sign Up on MEXC
Sign Up & Receive Up to 10,000 USDT Bonus