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Reserve Fund

The Reserve Fund (or Insurance Fund) is a capitalized pool of assets separate from user collateral.

Purpose​

  1. Cover Negative Funding: Pay funding fees when rates are negative.
  2. Cover Execution Loss: Absorb slippage or basis widening during extreme volatility.
  3. Backstop: Provide liquidity if a counterparty fails.

Funding​

  • Protocol Revenue (Mint/Redeem fees, Yield spread).
  • Investment rounds or SBL treasury allocation.