diff --git a/.gitignore b/.gitignore
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+++ b/.gitignore
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+
+# ── GSD baseline (auto-generated) ──
+.DS_Store
+Thumbs.db
+*.swp
+*.swo
+*~
+.idea/
+.vscode/
+*.code-workspace
+.env
+.env.*
+!.env.example
+node_modules/
+.next/
+dist/
+build/
+__pycache__/
+*.pyc
+.venv/
+venv/
+target/
+vendor/
+*.log
+coverage/
+.cache/
+tmp/
diff --git a/README.md b/README.md
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+++ b/README.md
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+# Kerf
+
+Modular raster-to-vector conversion engine + 2D sign/patch design canvas.
+
+## Repository Structure
+
+```
+engine/    — Kerf Engine (standalone API, Python/FastAPI)
+app/       — Kerf App frontend (React) [future]
+server/    — Kerf App backend API [future]
+docker/    — Dockerfiles and compose configs [future]
+```
+
+## Kerf Engine
+
+The engine is a self-contained FastAPI service that accepts raster images and returns clean vector output (SVG, DXF).
+
+### Quick Start
+
+```bash
+cd engine
+pip install -e ".[dev]"
+uvicorn main:app --host 0.0.0.0 --port 8000
+```
+
+API docs available at `http://localhost:8000/docs`.
diff --git a/engine/.gitignore b/engine/.gitignore
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--- /dev/null
+++ b/engine/.gitignore
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+*.egg-info/
+.eggs/
diff --git a/engine/api/__init__.py b/engine/api/__init__.py
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index 0000000..e69de29
diff --git a/engine/main.py b/engine/main.py
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+++ b/engine/main.py
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+"""Kerf Engine — raster-to-vector conversion API."""
+
+from fastapi import FastAPI
+
+app = FastAPI(
+    title="Kerf Engine",
+    description="Raster-to-vector conversion pipeline with Potrace and VTracer modes",
+    version="0.1.0",
+)
+
+
+@app.get("/health")
+async def health():
+    return {"status": "ok"}
diff --git a/engine/pipeline/__init__.py b/engine/pipeline/__init__.py
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index 0000000..e69de29
diff --git a/engine/pyproject.toml b/engine/pyproject.toml
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+++ b/engine/pyproject.toml
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+[build-system]
+requires = ["setuptools>=68.0", "wheel"]
+build-backend = "setuptools.build_meta"
+
+[project]
+name = "kerf-engine"
+version = "0.1.0"
+description = "Kerf Engine — raster-to-vector conversion pipeline"
+requires-python = ">=3.11"
+dependencies = [
+    "fastapi>=0.110",
+    "uvicorn[standard]>=0.29",
+    "opencv-python-headless>=4.9",
+    "pypotrace>=0.3",
+    "vtracer>=0.6",
+    "python-multipart>=0.0.9",
+    "Pillow>=10.2",
+]
+
+[tool.setuptools.packages.find]
+include = ["pipeline*", "api*"]
+
+[project.optional-dependencies]
+dev = [
+    "pytest>=8.0",
+    "httpx>=0.27",
+    "ruff>=0.3",
+]
diff --git a/engine/tests/__init__.py b/engine/tests/__init__.py
new file mode 100644
index 0000000..e69de29