Insurance fund
The reserve that absorbs liquidation losses before any trader is deleveraged.
When a liquidated position cannot be fully closed on the book, or closes beyond its bankruptcy price, the loss has to land somewhere. On Titan it lands on the insurance fund first.
- The fund takes over what the book could not absorb.
- It covers any loss beyond the liquidated position's margin.
- Only if the fund cannot cover a loss does auto-deleveraging happen.
Profitable traders are protected from someone else's liquidation for as long as the fund can carry it.
What gets recorded
Every amount the insurance fund covers is committed as an event leaf, in the history of the account whose loss it absorbed.