> For the complete documentation index, see [llms.txt](https://docs.pure.cash/pure.cash/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pure.cash/pure.cash/balancing-mechanism/stability-fund.md).

# Stability Fund

### Functions

When the supply of PUSD in a specific market (such as ETH/USD) exceeds the long positions excessively, the Stability Fund will implement the Active Redemption Mechanism:

The Stability Fund directly buys back PUSD or purchases USDC, then uses the Peg Stability Module (PSM) to mint PUSD on a 1:1 basis with USDC. Those PUSD are subsequently burned, thereby reducing the supply of PUSD in this market and restoring balance.

### Income Sources

1. Liquidation fees: Liquidation clearance fees (2%) are collected when users’ positions are forcibly liquidated.
2. Price impact fees.