> ## Documentation Index
> Fetch the complete documentation index at: https://docs.stonkme.fun/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidation and settlement

> What happens when a trader loses too much, and how money is split at the end.

## Liquidation

A sleeve can be liquidated once its loss reaches **80% of the trader's collateral**. Anyone can call it, and the keeper does. After that, anyone can unwind it: the stocks are sold back to USDC and the sleeve settles early. Whoever flagged the liquidation earns a keeper fee at settlement: 5% of the loss the collateral covered, paid from the trader's remaining collateral, never from the creator's money.

## Settlement

When the market ends, each sleeve is unwound to USDC and settled:

* **Profit:** the trader's collateral goes back to their stake, plus 30% of the profit. The creator gets the slice back plus 70% of the profit.
* **Loss:** the loss is taken from the trader's collateral first. The creator only loses money if the loss is larger than the collateral.

Once every sleeve has settled, the creator claims the escrow. A market that never filled is cancelled, and every sleeve is refunded.

## Example

A creator puts up 1,000 USDC; two traders join, 500 each. Alice trades NVIDIA (40% tier) and posts 200 of collateral; Bob trades Coinbase (100% tier) and posts 500.

| | Alice ends at 600 | Bob ends at 400 |
| - | - | - |
| Profit or loss | +100 | −100 |
| Trader gets | 200 collateral + 30 | 400 collateral (500 − 100) |
| Creator gets | 500 + 70 | 500 (covered by Bob's collateral) |


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