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Community Fund
The Community Fund in Perpetuity serves as the primary insurance mechanism for individual markets and acts as the sole liquidator during the alpha phase. Unlike traditional DeFi protocols, this fund does not actively make markets except when closing out positions after liquidations.
Key Features
- Insurance Provider: Acts as the primary insurance mechanism for individual markets
- Sole Liquidator: During alpha phase, handles all liquidations
- Passive Market Making: Primarily engages in market making to close out liquidated positions
- Fee Generation:
- 20% of all trading fees
- 80% of all liquidation fees
Market Insurance Requirements
Each market has specific minimum insurance fund requirements, currently they are:
| Market | Minimum Insurance Fund |
|---|---|
| Bitcoin | $100,000 |
| Ethereum | $70,000 |
| Solana | $70,000 |
These numbers are subject to change as the product matures.
Fund Allocation Process
Priority Allocation:
- Deposits are allocated to markets based on creation date
- Focuses on reaching minimum insurance requirements first
Trading Mode:
- Markets operate in reduce-only mode until minimum insurance is met
- Normal trading resumes once minimum requirements are satisfied
Deposit Terms:
- Minimum lock-up period: 7 days
- Withdrawals are proportional across markets
- Withdrawals are restricted if they would bring a market below minimum requirements
Auto-Deleveraging Triggers
Auto-Deleveraging occurs when either of these conditions are met:
- Market insurance fund falls below 50% of minimum requirement
- Community fund leverage exceeds 3x for a specific market
Risk Management
The Community Fund implements several risk management measures:
- Minimum insurance fund requirements per market
- Lock-up periods for deposits
- Proportional withdrawal system
- Auto-deleveraging mechanism
- Reduce-only trading mode for underfunded markets