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

# What is the insurance fund?

A protocol-managed reserve that pays out counterparties for liquidations that may otherwise be unprofitable, shielding all traders on the exchange from socialized losses.

The insurance fund ensures that unhealthy positions can be closed in an orderly way with sufficient incentives for backstop liquidity providers.