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

# How It Works

> What the vault holds, what limits allocation, and what limits exit

`MainVault` holds the USDC. It mints LP shares, funds the trading capital of every funded account, holds each backer's buffer as money it does not own, and books every settlement.

## Flows

| Flow | What happens |
| - | - |
| Funding an account | The vault allocates `accountSize` and deposits it on HyperCore for the funded account. That trading capital is LP money; the backer is charged the buffer `B` and the premium `P` on top of it. See [Account Parameters and Fees](/backers/fees) |
| Fees | The vault's half of each activation premium and each subscription payment stays on EVM and raises the share price. See [Yield and Risks](/vault/yield) |
| Settlement | On close the vault pulls back the recovered capital, releases the allocation, and books each party's claim. See [Profit and Payouts](/funded/payouts) |

Between funding and settlement the risk engine watches every account and initiates closing when it breaches its floor. The trailing floor starts at account size minus the backer's buffer; profit locks and the backed account's daily floor can trigger a close above that level. The floor sets the close trigger, not a guaranteed execution price.

An LP's position is shares. Fees raise the share price, a loss larger than a backer's buffer lowers it at settlement, and yield is not claimed separately.

Until an account settles, its allocation is carried at the original principal. Unsettled trading gains and losses do not change that figure, so deposits and exits use the vault's recorded NAV rather than a live mark of every account.

The owner may place idle, unencumbered USDC in Hyperlend. The vault counts the resulting hUSDC balance in its assets, and accrued interest also raises share value. Backer buffers, reserve refunds and payout liabilities stay in EVM USDC and are excluded from LP assets.

## Allocation limits

| Limit | Deployment setting | What it constrains |
| - | - | - |
| Max utilization | **80 %** | capital allocated to funded accounts, against the vault's assets |
| Max single account | **10 %** of the vault's assets, capped at **\$20,000** | the size of one funded account |
| Vault cap | **\$25,000** | the vault's assets |

The account size and drawdown a backer chooses inside these limits are on [Account Parameters and Fees](/backers/fees).

## Exit

Shares can be burned without notice or lock-up, subject to liquidity and utilization limits. A withdrawal must leave utilization at or below the ceiling and may spend only USDC the vault does not already owe in buffers, refunds and payouts. If some idle capital is in Hyperlend, the vault redeems only the cash shortfall in the same transaction. If the pool cannot supply it, the withdrawal reverts.

There is no share lock. A backer holding shares against live funded accounts exits on the same terms as any other LP. What can delay an exit is a busy vault: with utilization at the ceiling, a large withdrawal waits for an account to settle.

<Warning>
  Every LP withdrawal path is disabled while the protocol is paused. Pausing can be triggered by the owner or the relayer; only the owner can lift it. Trader and backer payout claims are deliberately exempt and keep working through a pause. LP exits are not.
</Warning>

## Governance

The account-size band, the drawdown band, the utilization ceiling, the per-account ceiling and the vault cap are set by the owner in a single call, which waits 72 hours in the timelock. The utilization and per-account ceilings have bounds compiled into the contract, and the drawdown band cannot be raised above 50 %. The account-size band must remain positive and ordered, but it and the vault cap have no fixed economic upper limit.

The premium tiers, the allowed profit-split range, the forfeiting split and the subscription multiplier are constants. Changing one requires replacing the relevant implementation. Upgrades of MainVault and risk-parameter changes wait 72 hours in the timelock. See [Security](/security).

## Next

<CardGroup cols={3}>
  <Card title="Yield and Risks" icon="trending-up" href="/vault/yield">
    What pays LPs, and what `reserveDeficit` takes from them
  </Card>

  <Card title="Security" icon="shield" href="/security">
    Audit, upgrade authority, and administrative safeguards
  </Card>

  <Card title="Account Parameters and Fees" icon="sliders-horizontal" href="/backers/fees">
    How `B` and `P` are priced on the account the vault funds
  </Card>
</CardGroup>


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