You Already Have A Stop Loss. You Did Not Set The Price.

Say your company borrowed against its own ETH. Not to gamble on anything, just to get some dollars out without selling a position you wanted to keep. Somebody set it up months ago. It has been fine ever since, which is exactly why nobody has opened it in a while.

There is a price at which that position gets sold. It is a real number and it exists right now. If the market touches it, the ETH goes, and nobody asks you first.

You did not choose that number. You were never consulted about it. There is a decent chance nobody at your company could tell you what it is today.

That is a stop loss. It has every part of one. A price, a trigger, a sale that happens whether or not anyone is at their desk. The only thing it is missing is you.

On Coinbase, or in an ordinary brokerage account, a stop order is something you write down. You name the price you are willing to get out at, the exchange holds the instruction, and if the market reaches it they sell for you at roughly that price. The proceeds are yours, less a fee in fractions of a percent.

Everyone borrowing onchain brings that picture with them, and it does not survive the trip.

Nothing is holding your instruction, because you never gave one. What closes a borrowed position on Aave is a stranger. They run a bot that watches the market, and the moment your position slips under the line they pay off part of your debt for you, on your behalf, without a word to you. In exchange they take some of your collateral, and they take more of it than they just paid. That gap is the whole reason they bothered.

So the sale still happens at a price, same as the exchange. The price was picked by the lending market when the asset was listed, and the difference is a payment to whoever got there first.

Aave publishes that payment as a setting on each asset, and the setting is enforced by the contract every one of these loans runs through. We did not take Aave's word for it. We read every liquidation the market announced on Ethereum over ninety days, priced both sides of each one at the moment it happened, and worked out what actually left the borrower.

Six hundred and thirty three positions were closed. Two hundred and twenty nine of them owed less than a dollar. Between all two hundred and twenty nine, the total debt paid off was twenty five dollars, because a third of every position Aave closed on Ethereum last quarter was a bot sweeping up loose change somebody walked away from years ago. The four hundred and four that owed real money are the set worth talking about.

Five percent, and it does not care how big you are. The same five percent on a thousand dollar loan and on a five and a half million dollar one. There is no volume discount and nothing to negotiate. It was written down before you arrived, it applies to you exactly as it applies to a stranger who borrowed forty dollars, and no amount of being a good customer for two years moves it.

Added up over those ninety days it comes to $1,154,803, taken from people to close positions they were still holding.

Ninety days, one lending market, one chain. The largest single one was $277,503, charged on a position of five and a half million dollars.

A tenth of the charge goes to Aave itself and the rest goes to the person who closed you. Neither of them did anything you asked for.

DeFi Saver exists for exactly this problem and has for years. You tell it how close to the line you are willing to get and it will unwind the loan before anyone else can. It works. People who set it up largely do not end up in the numbers above, and that deserves saying plainly rather than grudgingly. Aave itself is straight with you about where you stand, publishes the exact line your position gets closed at, and will tell you when you are near it.

The problem is not that these are bad. The problem is what they have in common, which is that every one of them is something you have to go and set up, per position, per market, per chain, and then keep alive.

And there is a fourth option nobody names, which is the one most companies actually pick. Watch it yourself, check on it when you remember, and deal with it if it gets close.

The people who paid the most were wide awake.

For each of those four hundred and four borrowers we found the last time they had touched that position before it was closed. Not the last time they looked at it. Nobody can measure that. The last time they moved money in or out of it, which is a thing the chain writes down permanently and anybody can go and read.

Eighty seven percent of everything charged in those ninety days was paid by twenty six borrowers with more than a hundred thousand dollars on the line. Those twenty six had adjusted the position a median of three days before it was taken. Nineteen of them within the week. Seven of them within a day.

These are not abandoned accounts. Somebody was managing that money, recently and on purpose, and the borrower who paid $277,503 had moved money in or out of it five days before it happened.

So the lesson is not pay closer attention. Those twenty six were paying attention, more of it than most, and it cost them a million dollars between them. Attention runs out. It runs out at night, on weekends, and during the exact hour a market decides to move.

The gap between the two things is not effort. It is when the decision gets made.

The stop you are handed is decided by the lending market, before you borrow, and it fires without you. The stop you want is decided by you, and the whole difficulty is making it fire without you too. A plan you have to be present to carry out is not a plan, it is a hope with a calendar reminder attached.

That is what a Plug is. You say what should happen, and the conditions under which it should happen, and you sign it once while the position is healthy and you are still thinking clearly about it. From then on it does not need you. Not your laptop, not your attention, not you being awake. The price is yours, the timing is yours, and there is nobody standing on the other side of it being paid five percent to make it happen.

The number that closes your position already exists. Somebody chose it. It was not you.