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+# Federation Setup Guide
+
+Federation enables peer-to-peer synchronization of beads databases between
+multiple Gas Towns using Dolt remotes. Each town maintains its own database
+while sharing work items with configured peers.
+
+## Overview
+
+Federation uses Dolt's distributed version control capabilities to sync issue
+data between independent teams or locations. Key benefits:
+
+- **Peer-to-peer**: No central server required; each town is autonomous
+- **Database-native versioning**: Built on Dolt's version control, not file exports
+- **Flexible infrastructure**: Works with DoltHub, S3, GCS, local paths, or SSH
+- **Data sovereignty**: Configurable tiers for compliance (GDPR, regional laws)
+
+## Prerequisites
+
+1. **Dolt backend**: Federation requires the Dolt storage backend (not SQLite)
+2. **Sync mode**: Must use `dolt-native` or `belt-and-suspenders` sync mode
+
+## Configuration
+
+### Enable Federation-Compatible Sync
+
+Edit `.beads/config.yaml` or `~/.config/bd/config.yaml`:
+
+```yaml
+sync:
+  mode: dolt-native                      # Required for federation
+
+federation:
+  remote: dolthub://myorg/beads          # Primary remote (optional)
+  sovereignty: T2                        # Data sovereignty tier
+```
+
+Or via environment variables:
+
+```bash
+export BD_SYNC_MODE="dolt-native"
+export BD_FEDERATION_REMOTE="dolthub://myorg/beads"
+export BD_FEDERATION_SOVEREIGNTY="T2"
+```
+
+### Sync Modes
+
+| Mode | Description | Federation Support |
+|------|-------------|-------------------|
+| `git-portable` | JSONL export to git (default) | No |
+| `realtime` | JSONL on every change | No |
+| `dolt-native` | Dolt remotes only | Yes |
+| `belt-and-suspenders` | Dolt + JSONL backup | Yes |
+
+### Data Sovereignty Tiers
+
+| Tier | Description | Use Case |
+|------|-------------|----------|
+| T1 | No restrictions | Public data |
+| T2 | Organization-level | Regional/company compliance |
+| T3 | Pseudonymous | Identifiers removed |
+| T4 | Anonymous | Maximum privacy |
+
+## Adding Federation Peers
+
+Use `bd federation add-peer` to register remote peers:
+
+```bash
+bd federation add-peer <name> <endpoint>
+```
+
+### Peer Name Rules
+
+- Must start with a letter
+- Alphanumeric, dash, and underscore only
+- Reserved names not allowed: `origin`, `main`, `master`, `HEAD`
+
+### Supported Endpoint Formats
+
+| Format | Example | Description |
+|--------|---------|-------------|
+| DoltHub | `dolthub://org/repo` | DoltHub hosted repository |
+| Google Cloud | `gs://bucket/path` | Google Cloud Storage |
+| Amazon S3 | `s3://bucket/path` | Amazon S3 |
+| Local | `file:///path/to/backup` | Local filesystem |
+| HTTPS | `https://host/path` | HTTPS remote |
+| SSH | `ssh://host/path` | SSH remote |
+| Git SSH | `git@host:path` | Git SSH shorthand |
+
+### Examples
+
+```bash
+# Add a staging environment on DoltHub
+bd federation add-peer staging dolthub://myorg/staging-beads
+
+# Add a cloud backup
+bd federation add-peer backup gs://mybucket/beads-backup
+bd federation add-peer backup-s3 s3://mybucket/beads-backup
+
+# Add a local backup
+bd federation add-peer local file:///home/user/beads-backup
+
+# Add a partner organization
+bd federation add-peer partner-town dolthub://partner-org/beads
+```
+
+### JSON Output
+
+For scripting, use the `--json` flag:
+
+```bash
+bd --json federation add-peer staging dolthub://myorg/staging-beads
+# {"name":"staging","endpoint":"dolthub://myorg/staging-beads","status":"added"}
+```
+
+### Verify Configuration
+
+Check stored peers:
+
+```bash
+bd config list | grep federation.peers
+```
+
+## Architecture Notes
+
+### How It Works
+
+1. Each Gas Town has its own Dolt database
+2. `add-peer` registers a Dolt remote (similar to `git remote add`)
+3. Push/pull operations sync commits between peers
+4. Conflict resolution follows configured strategy
+
+### Multi-Repo Support
+
+Issues track their `SourceSystem` to identify which federated system created
+them. This enables proper attribution and trust chains across organizations.
+
+### Connectivity
+
+Remote connectivity is validated on first push/pull operation, not when adding
+the peer. This allows configuring remotes before infrastructure is ready.
+
+## Planned Features
+
+The following operations have infrastructure support but are not yet exposed
+as commands:
+
+- `bd federation list-peers` - List configured peers
+- `bd federation push <peer>` - Push to specific peer
+- `bd federation pull <peer>` - Pull from specific peer
+- `bd federation sync <peer>` - Bidirectional sync
+
+## Troubleshooting
+
+### "requires direct database access"
+
+Federation commands require the Dolt backend. Ensure you're not running in
+daemon mode for federation operations.
+
+### "peer already exists"
+
+A peer with that name is already configured. Use a different name or check
+existing peers with `bd config list | grep federation.peers`.
+
+### Invalid endpoint format
+
+Ensure your endpoint matches one of the supported formats above. The scheme
+must be one of: `dolthub://`, `gs://`, `s3://`, `file://`, `https://`, `ssh://`,
+or git SSH format (`git@host:path`).
+
+## Reference
+
+- Configuration: See `docs/CONFIG.md` for all federation settings
+- Source: `cmd/bd/federation.go`
+- Storage interfaces: `internal/storage/versioned.go`
+- Dolt implementation: `internal/storage/dolt/store.go`