Key Insights:
- The new insurance model groups contracts by risk to improve fund efficiency and reduce liquidation triggers.
- $8M allocated to new listings, boosting early-stage protection during volatile market conditions.
- Real-time API tracking helps traders stay updated on fund reserves and drawdown-based ADL triggers.
Bybit has introduced a revised insurance fund system designed to lower the chances of Auto-Deleveraging (ADL) during unstable market conditions. The updated model took effect on December 19, 2025, and will be rolled out in phases across USDT perpetual contracts over the next two months.
Two separate insurance pools are now in place. One pool is set aside for newly-listed USDT perpetual contracts with a starting value of at least $8 million. The other is built for groups of contracts that share similar liquidity or risk traits. This pool carries between $2 million and $4 million, depending on the portfolio.
Shift from Single-Pair to Pooled Protection
Previously, each contract had its own insurance buffer. Bybit was moving toward a shared approach, where capital is grouped to cover a broader range of contracts. This structure allows funds to absorb more loss per contract—over 200% more compared to the older setup.
New contracts will be added to the first pool for an initial period of around 30 days. After that, they may move to the main fund or into a portfolio pool, depending on their performance and market behavior.
The portfolio pool groups up to nine contracts that move similarly or trade within related markets. These contracts are reviewed continuously based on trading volume, liquidity depth, open interest, and market trends.
Real-Time Monitoring and ADL Safeguards
Traders can now monitor both current and next-day (T+1) fund balances using Bybit’s API tools. If a trading pair experiences a sharp 8-hour drawdown of 30% or more and the related pool runs low, the ADL system will activate.
Bybit also noted that in fast-moving or illiquid markets, it may adjust ADL settings or inject funds directly to keep the system stable. The company stated that “drawdown thresholds and pool reserves are monitored closely to protect user positions.”
Improved Coverage for New and Active Contracts
The new setup was built to respond faster during sharp market shifts. Bybit’s approach groups contracts based on how they trade and how much risk they carry. This helps control ADL events that occur when market orders can’t be matched during liquidation.
Bybit confirmed that “loss-absorption per contract has increased by over 200%” under the new pooled model. The change is expected to offer better protection for users, especially during high-volume or unstable trading periods.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
Source: https://coincu.com/news/bybit-launches-8m-fund/
