If the amount of the deficit exceeds the insurance fund balance, the excess loss will accumulate in the socialized loss in the opposite direction, and the loss will be shared in proportion to the positions held by all holders of the that side at this time.

With traditional DeFi approach, liquidators supply liquidity, take over traders’ whole positions, and could be rewarded with the rest of the traders’ margin token after deduction of penalty. In the case where the traders’ margin is insufficient, the system’s insurance fund and social loss mechanism would firstly ensure payout of a minimum reward (as defined by bankruptcyLiquidatorRewardRatio parameter) to the liquidator.

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