> ## Documentation Index
> Fetch the complete documentation index at: https://docs.roxom.com/llms.txt
> Use this file to discover all available pages before exploring further.

# What is the Insurance Fund and how does it protect me?

> Understand how Roxom's Insurance Fund covers liquidation losses and protects traders.

The **Insurance Fund** is a pool of BTC that Roxom uses to cover losses from liquidations when the position can't be closed without going negative.

Its purpose is to protect traders from **owing more BTC than they have** and to reduce the need for Auto-Deleveraging (ADL).

***

## How it works

1. A trader is liquidated when their margin ratio reaches 100%
2. Roxom tries to close their position at or above the **Bankruptcy Price**
3. If the market moves too fast and the position closes below that price, there's a shortfall
4. The Insurance Fund covers that shortfall, so the losing trader's balance doesn't go negative
5. Only if the Insurance Fund runs out does ADL come into play

<Info>
  **See the full liquidation and Insurance Fund process** in the [Liquidation Mechanics](https://docs.roxom.com/rulebook/liquidation-mechanics/liquidation-triggers-and-overview) section of our Rulebook.
</Info>

***

## Where the Insurance Fund comes from

The Insurance Fund is mainly built from:

* Liquidations closed **better** than the Bankruptcy Price
* Platform funding in specific cases

<Info>
  **Read more about how the fund is maintained** in the [Insurance Fund](https://docs.roxom.com/rulebook/insurance-fund/insurance-fund-overview) section of our Rulebook.
</Info>

***

## Why it matters for you

* **Protects your balance**: Prevents you from losing more BTC than you deposited
* **Market stability**: Reduces the need for Auto-Deleveraging (ADL)
* **Fair trading**: Helps ensure fair trading during volatile conditions

***

## Key takeaways

<Note>
  **Important points:**

  * The Insurance Fund is your first line of defense after liquidation
  * ADL only happens if the fund can't cover losses
  * You can monitor ADL risk in your position panel, but you can't directly see the fund's balance
</Note>

<Warning>
  This content is for informational purposes only and does not constitute investment advice. Trading digital assets involves significant risk, including the potential loss of your entire investment. Please review our [Risk Notice](/legal/risk-notice) before trading.
</Warning>

***

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