BitMEX Insurance Fund Continues to Grow as it Now Owns 27,310 BTC
- BitMEX Insurance Fund keeps on rising despite the Bitcoin price
- The fund owns more notional value than DigixDAO, Tezos (XTZ) ICO raise and is even more than all other defi apps combined except for MakerDao
BitMEX Insurance fund has reached over $237.5 million (at the rate of $8,700 per BTC), holding 27,310 BTC, which is 0.154 percent of all bitcoins in circulation. On May 19th, it surpassed $200 million marks for the first time.
BitMex is an exchange for trading perpetual swaps, a type of derivatives contracts that are similar to the future contracts but doesn’t have expiry dates. They also are without a settlement that rather uses a funding mechanism.
As per its website, the Insurance Fund currently has a balance of 27,310.07 BTC. The exchange that accounts for the highest amount of Bitcoin trading of more than 6 percent uses an Insurance Fund to avoid auto-deleveraging in traders’ positions. The fund as explained by the exchange is used to aggress the unfilled liquidation order before they are even taken over by the auto-deleveraging system.
Second is BitMEX @BitMEXdotcom @BitMEXResearch. Every day at 9.15 AM ET they dump ~4 MB of just comically unoptimized withdrawal transactions. This is a big reason why fees are high during US office hours. Optimizing these to best practices would make these tx's shrink by 98% +. pic.twitter.com/x1VyOgHPOa
— Sergej Kotliar (@ziggamon) May 31, 2019
As for its continuous growth, it grows from the liquidations that were able to execute in the market at a price better than the bankruptcy price.
In its February report, BitMex stated,
“While the insurance fund has achieved a healthy size, it may not be large enough to give winning traders the confidence they need in the volatile and unpredictable bumpy road ahead in the crypto-currency space. Given such volatility, it’s not impossible that the fund is drained down to zero again.”
Crypto analyst, Josh Olszewicz, shares how this Insurance fund keeps on increasing that now accounts for 0.15 percent of all Bitcoin supply placing it at the 33rd position in Bitcoin rich list.
As can be seen in the chart, the Insurance Fund grew in tandem with the Bitcoin price until BTC topped out at about $20,000. However, while BTC dropped down to the bottom the fund keeps on increasing in 2018, as a matter of fact, during the last months of 2018 when Bitcoin crashed from $6k to $3,150, insurance fund took a rather bigger rise and is still not stopping. Now, it is yet again on the rise side by side with the BTC price.
Moreover, it holds more than twice the notion value of the largest ICO treasury DigixDAO (DGD) and the value raised in the Tezos (XTZ) ICO. However, this is less than the notional value of MakerDAO (MKR) but more than all other defi apps combined.
Meanwhile, during the recent BTC price surge to $9,000, the exchange reported of WebSocket API latency.
“During this period some WebSocket connections also experienced dropped market data updates as memory limits on an internal messaging layer were hit, forcing reconnections.”