# Insurance pool

The insurance pool is a separate liquidity pool that earns protocol fees and liquidation penalties in return for system risk management. Currently, the insurance pool is accumulating liquidity at 50% of all trading fees collected by the platform. 

Governance can change this weight based on the information and considerations outlined in the risk management section.

The insurance pool is a liquidator of last resort: when there is not enough liquidity in the system, the pool steps up to liquidate risky positions. It receives up to a 5% profit margin by doing so. \
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The amount of liquidity required to be held in the insurance pool can be efficiently measured when we calculate how much liquidity the system lacks under specific market stress scenarios.