Remi.eth Σ:

I had time today to review the protocol behind @strata_markets and holy smokes, folks, this might be the next platform that grows to billions because nearly every DeFi yield can bootstrap growth with a Strata pool. Different than Pendle but reminds me of the utility--marrying two very different user profiles: those more conservative needing guarantees their principal is protected vs those risk-on looking for max APY. If we were in a bull market, I'm not sure Strata gets the time of day, but right now, everyone's thinking about risk instead of APY so Strata could see significant growth! What is Strata? "Strata is a generalized risk-tranching protocol that brings structured yield products to any onchain or off-chain yield strategy by splitting yield into tokenized senior and junior tranches, each tailored to distinct risk–reward profiles." Who needs Strata? Strata allows onchain investors to choose their risk-reward profile in popular yields like @ethena sUSDe or @Neutrl sNUSD OTC arbitrage yield. The senior tranche is ideal for conservative users, offering safer, predictable yields. The junior tranche is ideal for risk-tolerant users seeking higher-yield opportunities. What kinds of yields are best to be tranched by Strata? Consider a yield like Aave USDC--you don't need to tranche this because USDC lenders are first, protected by overcollateralized loans, and second, they have the Umbrella module to make up any shortfall so as an aUSDC holder, we're technically seniors lenders to Aave, almost fully guaranteed we'll get back our principal deposit + yield. However, if you think about those lending to @MidasRWA vaults, or @3janexyz unsecured borrowers, or @Neutrl running a hedge-fund like OTC arb trade, there's more substantial risk to their yield-bearing products. Those depositors are almost all akin to junior tranche lenders where if there's a shortfall, they're gonna get hit first and lose some of their money, but simultaneously they're earning maximum yield. I think these higher-risk yields where you're basically assumed to be a junior are perfect to tranche with Strata and create a two-sided pool of seniors vs juniors. Example + Real Tranched Yields The latest addition of Neutrl's flagship OTC arbitrage yield product sNUSD is the best example for how powerful Strata can be as a generalized risk-tranching protocol. I can earn 7.8% APY in sNUSD on @Neutrl all on my own! I just go direct to Neutrl and deposit/stake sNUSD. However, I could instead earn a little less at 6.23% APY with the senior srNUSD, but enjoy a "a guaranteed minimum yield tied to the benchmark rate, while retaining uncapped upside participation in sNUSD APY." Basically, even if the yield ever went negative on sNUSD, the juniors would be paying to subsidize my guaranteed minimum yield. Alternatively, I could earn 10.86% APY in jrNUSD, meaning "it offers leveraged upside to sNUSD APY while simultaneously functioning as a liquid insurance pool for srNUSD, earning a risk premium from the senior tranche, for delivering a potentially higher yield for risk-tolerant investors." The jrNUSD holders are earning more yield than the sNUSD holders because the srNUSD holders are giving up some yield for protection if ever the yield drops substantially. Today, there are only 2 pools of yield tranched on Strata, making up the grand total of $171M TVL. 1⃣ $161M for Ethena USDe deposits, earning in sUSDe 2⃣ $10M for Neutrl NUSD deposits, earning in sNUSD Learn about @strata_markets here: app.strata.markets Note: I have no investment or partnership with Strata.

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