Binance released a proof‑of‑reserves update on November 2, confirming that for a snapshot taken at 00:00 UTC on October 31, holders of ten named tokens, including Bitcoin, could verify a backing ratio of at least 1:1.
The exchange also explained that its futures insurance reserves, which are separate from user assets, were used to replenish assets lost in a recent security incident. Binance said it only released excess funds above the required coverage level and that the remaining reserves exceeded that requirement.
Futures insurance and auto‑deleveraging
Binance’s futures insurance funds are its own reserves, not included in the user‑verifiable proof‑of‑reserves view. These funds are intended to absorb losses from bankrupt futures positions and to reduce the need to close opposing traders’ positions. The exchange monitors these funds against stress scenarios and adds company capital when needed.
The platform’s auto‑deleveraging (ADL) mechanism can be triggered when the insurance fund reaches its maximum takeover capacity or when unrealized losses exceed the available balance. Under ADL rules, profitable short positions may be reduced or closed to offset bankrupt positions, even if the short is still in profit.
Impact on hedged positions
When ADL reduces a profitable futures short, the offsetting effect on a corresponding Bitcoin holding diminishes. For example, if a trader holds 1 BTC and a short of 1 BTC that becomes profitable, an ADL reduction to 0.5 BTC would leave only half of the original hedge, exposing the trader to further price moves.
Binance’s Delta Neutral Account program offers lower ADL priority for qualifying hedged positions, but it does not exempt them from ADL. Eligibility requires Portfolio Margin or Portfolio Margin Pro, VIP 4 status or higher, and activation of Delta Mode, with the long and short exposures within 5 % of each other.
Account and contract considerations
Eligibility for reduced ADL priority applies only to qualifying accounts and does not extend automatically to sub‑accounts. The calculation includes assets in Cross Margin and Futures accounts but excludes Spot and options positions. Additionally, ADL operates contract‑by‑contract, meaning a position in one contract type cannot be used to cover losses in another.
Binance’s FAQs note that the detailed rules are governed by the relevant product terms, account arrangements, and legal entities, and that the educational material defers to the official rulebooks.
