The risks of providing funding are inherently low due to the design of our P2P funding mechanism.
1. If a trader's position is at a loss, he will cover the loss with funds in his Margin Wallet.
2. A trader's position is automatically liquidated once net value falls below the maintenance margin.
In the event (and this has never happened before) that the market were to drop/rise so fast that the forced liquidations cannot be matched to bids/asks in the order book, algorithms are in place to slow down liquidations.
In theory, these measures could still cause margin traders to lose more than the funds they hold in their account as collateral. Up to a certain point, we will cover the losses from our own reserves; however, if the price would change so dramatically that the majority of all margin positions would drop below zero, losses would be shared with margin funding providers. Again, this has never happened in the existence of our platform but could, in theory, happen.
Providing liquidity in margin funding is not risk-free. However, the interest rates are typically far higher than what is achievable through a savings account. Ultimately it is up to the user to weigh the risk/reward trade-off.