No trade opens without a stop on it

A Trader cannot place a bet and decide later where to get out. The stop has to cover the whole position, not just the part they are adding, and if they want to move it they have to put the new one in the same transaction as the old one comes out. The stop is not an order resting on the venue's book. It is a condition the contract publishes: once the price genuinely crosses it, anyone in the world can close the position on it, and the contract checks the crossing itself before it will act, so nobody can close a position that is still fine. On its own this is discipline, not safety. What it really does is make the next six layers possible: you cannot add up losses nobody has defined yet.

Every stop is priced at its worst case, never its best

We do not take a Trader's word for what a position can cost. We price it at the price they accepted going in, add what it will cost to get out, and round every step against them. If a stop sits so far away the exchange would close them first, we ignore the stop and charge the whole position. Optimism is free everywhere else in trading. Here it costs budget.

Everything they have open shares $4,000 of room.

The contract adds the measured loss at every declared stop and the cost of closing each position. That total cannot pass $4,000 when the order opens. The room is wallet-wide, so one position uses room that another position cannot use. It is priced at the stop and does not promise a fill at that exact price: the measured exit bound and the terminal halt cover the gap that execution can leave.

And size is not free, which is what really caps it

Opening something enormous moves the price against the Trader the moment they do it, and that cost comes out of the wallet immediately, shrinking the very budget they were spending. Worse for them, they have to pay it again to get out. So a giant position needs a stop set wide enough to clear its own cost of entry and exit, and a Trader reaching for a hair-thin stop on a huge size finds the stop sitting inside what it cost them to open. The position stops itself out before the market has done anything at all. Nobody has to enforce this. It is why the enormous, fragile book people imagine cannot actually be built here.

At $11,000, the Arlo closes itself

The $11,000 line is the owed amount plus the separate $250 slippage buffer. Everything is closed and the Arlo settles in the same sequence, and it is over: there is no topping up and carrying on. Anyone can trigger the halt, and the contract checks the wallet against live prices before it acts, so nobody can close a healthy Arlo.

$250 is set aside to pay for that close

Closing in a hurry costs something, and that money is already there. The separate $250 slippage buffer sits between the $11,000 halt and the $10,750 owed at settlement. It is part of the Trader's wallet and can be spent on the close; it does not promise that every payout will be covered.

Nobody can move your money out

Not the Trader, not us, not a court order pointed at the wrong address. The wallet has no owner, no pause button, no upgrade path, and no function anywhere in it that sends money to an address someone picks. It can pay two addresses, and both were fixed the moment your Arlo formed. Every single transaction is checked on the way out, and anything the check does not recognise is refused rather than waved through.

Then our money goes before yours

If a close is so ugly it eats through that $250, the next thing spent is our entire fee on your Arlo. We are paid out of the same wallet you are and we are paid after you, which means we earn nothing on an Arlo that ends badly for you. Then your bonus. Only after all of that is gone does anything reach your capital.

Settlement follows the fixed waterfall

At the end the wallet verifies that venue proceeds have landed, then pays the Backer's capital, their bonus, Arlo's cut and the Trader's remainder in that order. If money is still on its way back from the exchange, settlement waits rather than calling a shortfall that is not real. The Trader cannot open anything after Day 30, whether or not anyone has called settlement yet.

Suppose the Trader opens a position with a declared stop and the contract reserves part of the $4,000 wallet-wide room. The position is allowed because the measured stop loss, exit bound and close cost fit inside the available room. Other positions share the same room, so each new order has to fit what remains.

If the market crosses the stop, the contract can send a reduce-only close. The venue may fill at a worse price during a fast move. The measured exit bound prices the accepted slippage; anything beyond it is residual settlement risk. The terminal halt closes new trading when the wallet reaches $11,000.

If the wallet finishes below $10,750, the shortfall reaches the payout waterfall. The Trader's remaining value is consumed first, then Arlo's $150 cut, then the Backer's $600 bonus, and only then the Backer's capital.

The stop is the intended exit

The contract requires a declared stop and leaves venue liquidation distance where the model can measure it. A fast market can still gap through the stop or reach liquidation before the close lands, so the measured exit bound and the terminal halt are part of the design. There is no promise that every close fills at the declared price.

They cannot open a trade whose exit is not already counted

The price a Trader accepts on the way in is the price we charge them against, so the cost of their own size is inside the $4,000 before the order is allowed. They cannot build a position that is cheap to open and ruinous to close.

A market that moves while a stop is being filled

A stop is a contract trigger followed by a reduce-only close at the venue. The venue may fill worse than the trigger during a fast move, and liquidation can happen before that close lands. The measured exit bound prices the slippage the wallet accepts when the position opens; anything beyond it is residual settlement risk. The wallet can therefore lose more than the opening room in an extreme execution path, up to the Trader's contribution and then the fixed waterfall.

The venue, Arbitrum, or the stablecoin

An Arlo sits on top of three systems it does not control. A venue outage, a chain halt or a depeg reaches the wallet regardless of anything Arlo does.