Why Strata
Structured Yield Products: Risk-Optimized Access to On-Chain Yields.
Strata: Structured Risk. Structured Yield.
Today’s DeFi yield products are one-size-fits-all, where every depositor bears the same risk regardless of their individual risk tolerance. This limits adoption from conservative capital and prevents efficient, market-based pricing of risk. In reality, DeFi yields function like private credit and require traditional private-credit style waterfall structures, implemented fully on-chain with transparency and composability. As investor demand shifts from standardized yields to tailored, risk-optimized yields, risk-tranching becomes the essential missing layer DeFi needs today to democratize on-chain yields.
Strata introduces explicit risk-tranching mechanism designed to offer structured yield products on diverse yield strategies by splitting yield and risk into two tokenized tranches : Senior and Junior, each designed for distinct risk-reward profiles.
Senior tranche is suitable for risk-averse investors, providing the safest access to the underlying yield strategy with protection against strategy and counterparty risks.
Junior tranche acts as a liquid insurance fund underwriting the strategy risk (credit, volatility, collateral) in exchange for a risk premium from the senior tranche, providing leveraged upside to the underlying yield.
This structure enables transparent, market-driven pricing of risk, attracts a wider range of investors from risk-averse institutions to yield-seeking DeFi users, and transforms DeFi yields into structured, risk-adjusted financial products similar to how securitization scaled fixed income in TradFi. It eliminates the need for an embedded insurance fund in DeFi yield products by allowing the market to price underlying risk directly. The junior tranche assumes this risk in exchange for higher potential returns, while the senior tranche gets safer, moderate returns with built-in protection.
Strata targets global conservative capital to be onboarded into on-chain finance with low-risk, uncorrelated, transparent and scalable on-chain yields while meeting high-yield demand from DeFi-native users.
Strata is purpose-built to deliver structured yields on diverse on-chain and off-chain yield strategies by segmenting risk into distinct tranches, each tailored to match the risk-return profiles of different investor types. This tranching structure unlocks targeted exposure, improves capital efficiency, and catalyzes the growth of underlying yield product: one that is more inclusive, scalable, and institution-ready.
Tailored Risk Exposure Conservative investors prioritize predictable, low‑risk returns, while risk-tolerant users seek higher-yield opportunities with greater upside.
Enhanced Risk-Return Pricing Splitting yield into senior and junior risk tranches enables real-time and transparent market-based pricing of risk and returns.
Capital-Efficient Access Both tranches are tokenized as fully permissionless and composable assets, enabling seamless integration across DeFi and CeFi. This design offers enhanced capital efficiency, flexibility, and broad accessibility for a wide range of users.
Strata’s dual-token design marks a meaningful shift in the risk management by splitting risk and yield into distinct senior and junior tranches.
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