**Core Concept**
Amphotericin B is a polyene antifungal medication that binds to ergosterol in fungal cell membranes, causing cell lysis and death. However, it also binds to cholesterol in mammalian cell membranes, leading to its toxicity. The mechanism of toxicity involves the activation of the complement system and the release of inflammatory cytokines.

**Why the Correct Answer is Right**
The use of liposomal formulations of Amphotericin B can reduce its toxicity by decreasing its uptake by mammalian cells and increasing its delivery to fungal cells. This is achieved by encapsulating the drug in liposomes, which are composed of phospholipids that resemble the cell membranes of fungi. The liposomes are taken up by the reticuloendothelial system, where they are cleared from the circulation, reducing the exposure of mammalian cells to the drug. Additionally, liposomal Amphotericin B has a longer half-life, allowing for less frequent dosing and reducing the peak concentrations of the drug.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because it does not address the mechanism of toxicity of Amphotericin B. While it may be a potential treatment option for fungal infections, it does not specifically reduce the toxicity of the drug.
**Option B:** This option is incorrect because it is a potential cause of toxicity, rather than a solution. Hypokalemia is a known side effect of Amphotericin B, which can be caused by the drug's effects on the kidneys and the release of potassium ions.
**Option C:** This option is incorrect because it is not a known method for reducing the toxicity of Amphotericin B. While it may be a treatment option for certain conditions, it is not relevant to the reduction of Amphotericin B toxicity.

**Clinical Pearl / High-Yield Fact**
Liposomal formulations of Amphotericin B are preferred for the treatment of invasive fungal infections, particularly in patients with compromised immune systems. This is because they have a better safety profile and are more effective than conventional Amphotericin B.

**Correct Answer:** D. Liposomal formulations.