Read on TwitterReally excited about this one! Thanks to @RyanWatkins_ @psykeeper_ @twobitidiot
1/ Risk-Tranching protocols are a new DeFi vertical that has recently caught the interest of major players in the ecosystem. This piece explores how they work and their potential market fit with institutional players.
2/ RT has traditionally been used in financial markets but DeFi has allowed new protocols such as Saffron and BarnBridge to create new tranched products On-Chain. Allowing for transparency and customizable risk profiles, these protocols are paving the way for DeFi mass adoption.
3/ Ranging from fixed-interest rate pools and high-interest rate pools to IL mitigation pools, these projects are at the forefront of innovation. Risk-Tranching as a new DeFi vertical is here to stay.
4/ “Risk tranching will expand the total addressable market of DeFi by offering both higher yields and lower risk options to users” - @psykeeper_ , Founder of Saffron Finance
5/ In this piece, I explore in detail how the different products offered by @saffronfinance_ and @Barn_Bridge work.
From Saffron Tranched-Pools to BarnBridge& #39;s SMART Yield Bonds, this is an incredibly innovative vertical. And everything happens On-chain!
From Saffron Tranched-Pools to BarnBridge& #39;s SMART Yield Bonds, this is an incredibly innovative vertical. And everything happens On-chain!
6/ New Horizons: I also dive into what& #39;s next for these protocols.
1- Fixed interest rate pools: where the senior tranche earns a steady APY, and the junior tranche has a variable return rate.
1- Fixed interest rate pools: where the senior tranche earns a steady APY, and the junior tranche has a variable return rate.
7/ IL will soon be a distant thought...
2- Impermanent loss mitigation pools: where senior tranche buys protection against impermanent loss and junior tranche earns enhanced APY from trading fees and/or Liquidity Mining rewards.
2- Impermanent loss mitigation pools: where senior tranche buys protection against impermanent loss and junior tranche earns enhanced APY from trading fees and/or Liquidity Mining rewards.
8/ Both teams are incredibly active
3- SMART Alpha Bonds: where tranched volatility derivatives are used to mitigate Market Price Exposure Risk. The BarnBridge team is currently working on this product.
4- Multi-Protocol pools: more on this in the report.
3- SMART Alpha Bonds: where tranched volatility derivatives are used to mitigate Market Price Exposure Risk. The BarnBridge team is currently working on this product.
4- Multi-Protocol pools: more on this in the report.
9/ This last one might be unexpected but...
5- Insurance Products: Finally, one thing to consider is that these products can act as “built-in” insurance for smart contracts similar to insurance protocols like Nexus.
5- Insurance Products: Finally, one thing to consider is that these products can act as “built-in” insurance for smart contracts similar to insurance protocols like Nexus.
10/ I hope you will like it, thanks to the @MessariCrypto team for this opportunity. The Community Analyst Program is awesome, join us!
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