Source: [Settle](https://sapio.network/docs/settle)

# Settle

Settlement is the process that adds assets to the reserve. When submissions close, the protocol calculates a purchase instruction for each required token.

The instruction states how much of that token the reserve needs. It also sets each proposer's maximum delivery responsibility.

Settlement has two stages:

1. Public sellers can deliver the required tokens and receive newly issued SRT.
2. Proposers must deliver their assigned share of any amount that remains.

Each token has a separate instruction. A purchase of one token does not reduce the amount needed for another token.

## A simple example

Assume that the reserve needs 100 units of token A. The reserve size stays the same during this example.

- Public sellers deliver 70 units.
- The remaining amount is 30 units.
- Proposers who supported token A share the responsibility for those 30 units.

A proposer who supported only token B has no responsibility for token A. One proposer's failure to deliver does not increase another proposer's delivery responsibility.

## Public sellers act first

The public auction offers SRT for each required token. Its price starts at zero and increases toward the current market price plus the allowed markup.

The quote also follows the current market price. Thus, a decrease in the market price can decrease the quote.

A price limit restricts what the protocol can pay. The protocol fixes this limit from the reference price when it announces the competition.

If the quote exceeds the limit, public purchases pause. They also pause if the required oracle data is missing or invalid. An oracle supplies price data to the protocol.

A pause does not extend the auction. When the public window closes, proposers become responsible for the remaining amount.

The auction seeks a favorable price. It cannot guarantee the lowest market price or enough sellers to complete every instruction.

## Proposers deliver the remaining amount

Public purchases reduce the responsibility of all proposers who supported the same token. The reduction follows each proposer's share of that responsibility.

After the public window closes, proposers have a separate delivery period. They receive SRT for accepted deliveries, subject to the announced price rules.

The delivery price can differ from the fixed reference price. **It does not change the price used to measure competition performance.**

The protocol records responsibility relative to the reserve size at announcement. Later SRT minting or redemption can change the physical amount due. The announced expansion limit restricts any increase in proposer responsibility.

## If a proposer does not deliver

The undelivered share loses reward eligibility. Public purchases count as completed delivery for this calculation.

For example, assume that a position has a maximum responsibility of 100 units:

- Public sellers deliver 60 units.
- The proposer delivers 20 units.
- The remaining 20 units make 20% of the position's stake ineligible for rewards.

This example assumes that all the position's stake carries delivery responsibility. Stake that matches the current reserve mix can have no delivery responsibility.

The announced rules can also confiscate part of the ineligible stake. The proposer can reclaim the part that those rules leave available.

## What this means for SRT holders

Accepted deliveries add assets to the reserve and normally create new SRT. The asset mix and the backing value of each SRT can change.

Holders can still mint and redeem against the reserve basket, subject to the contract rules and successful token transfers. Only complete delivery reaches the full target. Partial delivery produces only part of the planned change.

See [Settlement Reference](https://sapio.network/docs/settlement-reference.md) for delivery limits and payment options. See [Redistribute](https://sapio.network/docs/redistribute.md) for the reward calculation.