# Profit Sharing

Detailed guide to profit calculation and payout distribution.

## Overview

Profit sharing aligns incentives between investors and traders on Atract. When a vault closes profitably, both parties receive their agreed-upon percentage of the net profit.

**Key Principle:** Investor always gets principal back first; profits are split only after capital is returned.

## Basic Calculation

Net Profit = Final Balance - Initial Balance

**If Net Profit > 0:**

* Trader Share = Net Profit × Trader %
* Investor Share = Initial Balance + (Net Profit × Investor %)

**If Net Profit ≤ 0:**

* Trader Share = 0
* Investor Share = Final Balance

## Example

**Profitable Trade:**

* Initial: $10,000
* Final: $15,000
* Profit: $5,000
* Split: 80/20 (Trader/Investor)

**Payout:**

* Trader: $5,000 × 80% = $4,000
* Investor: $10,000 + ($5,000 × 20%) = $11,000

**Loss:** If final balance is $8,500 (loss of $1,500):

* Trader: $0
* Investor: $8,500

## Common Split Ratios

| Split | Use Case                                    |
| ----- | ------------------------------------------- |
| 80/20 | Standard (most common)                      |
| 70/30 | Higher investor share for newer traders     |
| 90/10 | Higher trader share for proven track record |

## Settlement Process

1. **Vault Closes** - All positions closed, final balance determined
2. **Profit Calculated** - System computes net profit/loss
3. **Shares Allocated** - Each party's payout calculated
4. **Withdrawal Enabled** - Both parties can withdraw their share

## Withdrawal

**Process:**

1. Go to vault dashboard after closure
2. Click "Withdraw"
3. Confirm transaction
4. USDC transferred to wallet

**Rules:**

* Can only withdraw once
* Must withdraw full amount
* No time limit on withdrawal
* Gas fees apply

## Tax Considerations

**Consult a tax professional.**

* Profits may be taxable as income or capital gains
* Keep records of all trades and settlements
* Export trade history from dashboard

## Related Pages

* [Vault Lifecycle](/funding-and-vaults/vault-lifecycle.md)
* [Creating Proposals](/funding-and-vaults/creating-proposals.md)
* [Risk Controls](/trading/risk-controls.md)


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