Jul 7
Onchain tranching is positioning itself as the future of structured finance in DeFi
➤ Onchain tranching, though currently a small fraction of DeFi lending, is poised to revolutionize crypto capital markets by introducing structured finance principles. ➤ This mechanism splits lending pools into tranches with varying risk profiles, offering higher yields for junior (first-loss) positions and more stable returns for senior positions. ➤ While distinct from the dominant 'looping' strategy, tranching provides sophisticated risk allocation, appealing to institutional investors and offering new strategic options for DeFi users.