diff --git a/.scratch/distributed-gguf-runtime/issues/038-implement-isolated-shard-local-hot-kv-state.md b/.scratch/distributed-gguf-runtime/issues/038-implement-isolated-shard-local-hot-kv-state.md
index 8505bbd..63bf001 100644
--- a/.scratch/distributed-gguf-runtime/issues/038-implement-isolated-shard-local-hot-kv-state.md
+++ b/.scratch/distributed-gguf-runtime/issues/038-implement-isolated-shard-local-hot-kv-state.md
@@ -1,7 +1,7 @@
 <!-- GENERATED FROM prd.json — DO NOT EDIT AS AN INDEPENDENT SOURCE. prd.json IS AUTHORITATIVE. -->
 # DGR-038: Implement isolated shard-local Hot KV State
 
-- **Status / triage:** specification only; `ready-for-agent`; `passes: false`
+- **Status / triage:** completed; `passes: true`
 - **Execution mode:** `AFK`
 - **Milestone:** `M2`
 - **Dependencies:** `DGR-037`
@@ -18,11 +18,11 @@ Fresh Ralph session: read `.scratch/distributed-gguf-runtime/RALPH-CONTEXT.md`,
 
 ## Acceptance criteria
 
-- [ ] Map `(route_session_id, route_epoch)` to an isolated llama sequence or bounded context.
-- [ ] Support prefill/decode append, truncate, release, TTL/LRU eviction, cache miss, and stale-epoch rejection.
-- [ ] Four concurrent sessions complete without token, KV, position, or cancellation cross-talk.
-- [ ] Release/eviction returns memory to the configured budget without affecting other sessions.
-- [ ] Applicable shared quality gates in `prd.json` pass, and the evidence handoff records exact commands/results, changed files, limitations, and dependency handoff.
+- [x] Map `(route_session_id, route_epoch)` to an isolated llama sequence or bounded context.
+- [x] Support prefill/decode append, truncate, release, TTL/LRU eviction, cache miss, and stale-epoch rejection.
+- [x] Four concurrent sessions complete without token, KV, position, or cancellation cross-talk.
+- [x] Release/eviction returns memory to the configured budget without affecting other sessions.
+- [x] Applicable shared quality gates in `prd.json` pass, and the evidence handoff records exact commands/results, changed files, limitations, and dependency handoff.
 
 ## Shared quality gates
 
@@ -36,4 +36,4 @@ Fresh Ralph session: read `.scratch/distributed-gguf-runtime/RALPH-CONTEXT.md`,
 
 ## Evidence handoff
 
-Write and verify `.scratch/distributed-gguf-runtime/evidence/DGR-038/README.md`. Until every criterion and applicable gate has real evidence, this story remains `passes: false`. Legacy evidence is provenance only, not completion credit.
+Verified evidence: `.scratch/distributed-gguf-runtime/evidence/DGR-038/README.md`. Legacy evidence remains provenance only and grants no implementation completion credit.
diff --git a/.scratch/distributed-gguf-runtime/prd.json b/.scratch/distributed-gguf-runtime/prd.json
index 00008ff..2aee63f 100644
--- a/.scratch/distributed-gguf-runtime/prd.json
+++ b/.scratch/distributed-gguf-runtime/prd.json
@@ -1116,14 +1116,15 @@
         "Release/eviction returns memory to the configured budget without affecting other sessions.",
         "Applicable shared quality gates in `prd.json` pass, and the evidence handoff records exact commands/results, changed files, limitations, and dependency handoff."
       ],
-      "passes": false,
+      "passes": true,
       "notes": "Generated source issue: .scratch/distributed-gguf-runtime/issues/038-implement-isolated-shard-local-hot-kv-state.md; prd.json is authoritative.",
       "blocks": [
         "DGR-039",
         "DGR-052",
         "DGR-055",
         "DGR-069"
-      ]
+      ],
+      "completionNotes": "Completed by agent"
     },
     {
       "id": "DGR-039",