Seed Fund

What is the seed fund?

A mutualised guarantee fund that backs the venue. It is the last collateral the default waterfall reaches before any loss is shared, and it exists so that a single insolvency does not fall straight onto the honest counterparty.

It is a backstop, not a profit pool. It is funded to cover a residual, not to take risk for return.

Where does it sit in the waterfall?

After a defaulter's own collateral, before any haircut on the survivors. When a party is liquidated, each counterparty is paid in order:

1. The defaulter's SCA for that relationship.
2. The defaulter's general balance, pro-rata.
3. The guarantee fund — covers what remains.
4. A pro-rata haircut on the survivors — only if the fund is also short.

So the fund stands between a defaulter's exhausted collateral and a loss landing on the people who did nothing wrong. The full order is in Liquidation & Default Waterfall (~5 min).

What does the seed fund not do?

It does not net one counterparty against another, and it does not make CRX a central counterparty. Each survivor is still paid from the defaulter's own estate first; the fund only covers the residual after that estate is spent. CRX remains bilateral by construction.

Seeded, not deep. On testnet the fund is seeded to prove the mechanism, not sized for production risk. Treat its depth as a demonstration, not a guarantee.

Next: back to NDF (~3 min), or jump to Build → Trade (~3 min).