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

# Fully-Collateralized Contracts

> Learn how Polymarket US supports fully-collateralized contracts and guarantees payouts

Polymarket only supports **fully-collateralized contracts**, meaning both sides post the full amount required to cover the maximum possible payout at the time the trade is executed. No additional funds are required afterward.

***

## What Fully-Collateralized Means

When buying and selling contracts:

* Both buyer and seller post **full collateral** upfront.
* **Polymarket Clearing** holds these funds until settlement.
* At settlement, the **funds are released**.

Every contract is fully-collateralized. This ensures that **negative balances are impossible** and **payouts are guaranteed** at settlement.

**Example**

| Participant         | Funds Posted |
| ------------------- | ------------ |
| Buyer               | \$0.40       |
| Seller              | \$0.60       |
| Polymarket Clearing | \$1.00       |

***

## Maximum Gain and Loss

* **Maximum loss** is the amount paid for the contract.
* **Maximum gain** is the difference between \$1 and the amount paid.
* Once the trade is executed, maximum gain and loss do not change.

**Example**

| Position | Max Loss | Max Gain |
| -------- | -------- | -------- |
| Buy Yes  | \$0.40   | \$0.60   |
| Sell Yes | \$0.60   | \$0.40   |

***

## Settlement and Payout

* At settlement, **Polymarket Clearing** releases funds automatically.
* The winner receives **\$1 per contract; loser receives \$0**.
* No margin calls, reconciliations, or additional obligations.

## Key Points

* Buyer and seller post **full collateral** upfront.
* Maximum gain and loss are **fixed at the time of the trade**.
* No additional funds are required after the trade.
* **Polymarket Clearing guarantees payout.**
* There are no negative balances.