> For the complete documentation index, see [llms.txt](https://docs.getrekt.trade/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.getrekt.trade/self-bootstrapping.md).

# self bootstrapping

GetRekt starts with an empty liquidity pool. It does not require an initial LP deposit to accept a collateralized position. The trader supplies that position's own margin; the protocol must keep that margin separate from money available to pay other traders.

There is no direct LP-deposit entry point in the current design. Depositing USDC for trading does not buy LP shares or entitle the depositor to LP revenue.

## Where liquidity comes from

When a cash-backed position closes at a loss, the lost USDC becomes available for allocation. After the 2% protocol fee, an eligible referrer receives 30% of the remainder and the LP receives 70%. With no referrer, all of the post-fee amount goes to the LP.

This creates a bootstrapping cycle: participants introduce traders, cash losses add LP capital, and that capital pays winning traders. Losing traders receive $REKT according to the global emissions schedule. Referral income is an incentive for participation, not a promise of continuous income or a claim of a first-ever mechanism.

| A referred trader loses 100 USDC in cash | Allocation      |
| ---------------------------------------- | --------------- |
| Protocol fee                             | 2 USDC          |
| Referrer                                 | 29.4 USDC       |
| LP                                       | 68.6 USDC       |
| Trader's initial-epoch reward            | 1,000,000 $REKT |

## What happens when traders win first?

Available LP cash pays their net profits. The unpaid portion becomes an on-chain claim. Older claims are paid before newer claims, and a claim may be partially paid. There is no fixed waiting time: if no new LP cash arrives, claims can remain unpaid.

A claim can be used as collateral. Losing that position reduces what the protocol owes, but adds no USDC to the pool. Such a loss earns $REKT and advances the halving counter; it pays no referral reward.

{% hint style="warning" %}
The model can therefore grow its loss counter and token supply faster than its cash reserve. A token reward does not repay a lost dollar or guarantee the value of an outstanding claim.
{% endhint %}

Read [Solvency and queue accounting](broken://pages/48d2882b994a8ae55e1c97c563cd556494fed811) and [Referral fees](broken://pages/4ae98f6aa1e3c0a457110b4f9eefb1d3448a99a6).


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