How it works

A shield, priced by the odds.

Everything that happens between buying a Scutum and getting paid: the policy, the price, the pool on the other side, the oracle that settles it and the rules that keep it solvent.

I
Life of a Scutum

Five moments, zero paperwork.

MomentWhat happensWho acts
1 · QuoteYou pick a stock token, position size, floor (−5% to −30%) and term. The contract quotes a premium from the stock's volatility, your floor, the term and the pool's load.You
2 · BuyYou pay the premium in USDC. A Scutum is minted to your wallet with its terms: stock, shares covered, floor, payout cap, expiry.You
3 · Warm-upThe shield activates after a short delay, so nobody can insure a stock in the middle of a crash.Contract
4 · ExpiryAt the settlement time an oracle price for the stock token is read on-chain.Oracle
5 · SettleIf the price is under your floor, the difference (up to the cap) is sent from the Legion pool to your wallet by a keeper. Otherwise the premium stays with the pool.Keeper

You keep the stock the whole time. A shield is a separate agreement, so you can sell the stock and keep the shield, or the other way round.

II
The payout

Pays the gap, not the whole fall.

A shield pays the distance between your floor and the closing price, for every share covered, up to a cap 25 points below the floor.

// per share covered
payout = min( max(floor − close, 0), floor − cap )
// floor = price × (1 − 10%)   cap = floor − 25% × price
PAYOUT AT EXPIRYTSLA · $10,000 · FLOOR −10%
FLOOR $281 CAP $203 MAX $2,500 $0 ABOVE FLOOR CLOSING PRICE →
III
Pricing

The closer the floor, the higher the price.

A shield is a capped put spread. Its fair cost is what the pool expects to pay on average, computed from the stock's volatility. On top come the pool's margin, a load surcharge and the protocol fee.

fair     = shares × [ Put(floor) − Put(cap) ]  // Black–Scholes, zero rates, the stock's volatility over the term
margin   = 25% × fair  // the Legion's edge
load     = fair × utilization × 12%  // rises as the pool fills
fee      = 12% × (fair + margin + load)  // protocol
discount = −tier% × (margin + load + fee)  // $TSTD holders; never touches the fair cost
premium  = fair + margin + load + fee + discount
TSLA · $10,000 · 1 weekChance it paysPremium
Floor −5%27.5%$180
Floor −10%10.2%$49
Floor −15%2.4%$8.60
Floor −20%0.3%$1 min
$10,000 · floor −10% · 1 monthVolatilityPremium
SPY16%$2.34
AAPL26%$37
NVDA48%$242
TSLA58%$363

Demo model with reference volatilities. Floors closer than −5% are not sold: they pay so often that the premium approaches the payout, and they invite gaming around the start time.

IV
The Legion pool

Two ranks behind every shield.

The pool that pays out is split into two tranches. Losses hit the first-loss tranche before they touch anyone else, and that tranche is paid more for the risk.

Front rank

First-loss tranche

Funded by $TSTD stakers. Takes payouts first, up to its full size, and earns double weight on the pool's margin. Stakers are the most confident underwriters, so they stand in front.

2× share of margin · absorbs losses first
Rear rank

Senior tranche

Funded by USDC liquidity providers. Pays only after the first-loss tranche is used up, earns the base share of premiums and can withdraw after each settlement window.

1× share of margin · protected by the front rank
Example week · 100 shields · TSLA $10,000 · floor −10%Amount
Premiums collected$4,925
Expected payouts (fair cost)−$3,382
Protocol fee−$528
Expected pool income (margin + load)$1,016
Of the fee: bought back and burned / oracles, keepers, development$317 / $211

Expected values. In a calm week the pool keeps nearly every premium; in a crash week it pays more than it collected. The margin is what makes the long run positive, and the safeguards below are what make the bad weeks survivable.

V
Settlement

The oracle decides, not a claims desk.

Price source

Decentralized price feeds for stock tokens on Robinhood Chain, read on-chain at the settlement time. Feeds are chosen per stock and listed publicly.

Settlement time

Week and month shields settle at the close of their last trading day. Weekend Shields settle on the first feed update after Monday's open.

Fallbacks

If a feed is stale or deviates from a second source, settlement waits for a valid price instead of paying on a bad one. Anyone can trigger settlement once it is due.

VI
Safeguards

Rules for the worst week.

RuleWhat it doesWhy
Coverage limitTotal cover per stock and per pool is capped against a stress scenario: every covered stock falling 30% at once.The pool can pay the worst case it has sold.
Start delayShields activate a few hours after purchase; Weekend Shields stop selling at Friday's close.No insuring a stock already in free fall.
Utilization pricingThe load surcharge grows with the share of the pool already committed.Crowded trades pay for their own risk.
First-loss tranche$TSTD stakers absorb losses before USDC providers.Skin in the game sits in front.
Capped payoutsA shield pays at most 25% of the price below its floor.Every policy has a known maximum.
Minimum floorNo floors closer than −5%.Near-certain payouts are not insurance.
VII
Shield or stop-loss

Keep the position, cap the damage.

Stop-loss orderTestudo shield
On a price gapSells at the next price, often far below the stopPays the gap below your floor, up to the cap
Your sharesSoldStill yours
If the price recoversYou are out and miss itYou keep the recovery and the payout
CostFree, until it fires at the bottomA known premium up front
WeekendsNothing works while the market is closedWeekend Shield is made for it

Price your shield