Low-risk DeFi is only the start on Ethereum.
Full-spectrum risk DeFi is what we are excited about building at @3FLabs. DeFi yield has definitely found PMF and with a bit of creativity and coordination, we have the opportunity to scale junior/mezzanine of DeFi - similar to how senior credit (overcollateralized lending) is starting to dominate the defi mullet thesis with integrations with CEXs, custodians and fintechs.
To my mind, there are two main primitives necessary to commercialize higher-risk defi: tranching and leverage
- Tranching (horizontal scaling): slices single yield stream/risk into multiple products for different appetites. @pendle_fi’s PT/YT split is an example of this. Benefit is that the splitting of risk expands addressable market by being more targeted. Seniors attract conservative capital, junior attract degens.
- Leverage/Looping (vertical scaling): turns a modest yield into supercharged returns by increasing effective exposure. Benefit is increasing demand by making collateral more productive. This is where @3FLabs is innovating.
By splitting risk and amplifying returns, tranching and leverage together will exponentially expand the addressable market for yield. And we are here for it!
Full-spectrum risk DeFi is what we are excited about building at @3FLabs. DeFi yield has definitely found PMF and with a bit of creativity and coordination, we have the opportunity to scale junior/mezzanine of DeFi - similar to how senior credit (overcollateralized lending) is starting to dominate the defi mullet thesis with integrations with CEXs, custodians and fintechs.
To my mind, there are two main primitives necessary to commercialize higher-risk defi: tranching and leverage
- Tranching (horizontal scaling): slices single yield stream/risk into multiple products for different appetites. @pendle_fi’s PT/YT split is an example of this. Benefit is that the splitting of risk expands addressable market by being more targeted. Seniors attract conservative capital, junior attract degens.
- Leverage/Looping (vertical scaling): turns a modest yield into supercharged returns by increasing effective exposure. Benefit is increasing demand by making collateral more productive. This is where @3FLabs is innovating.
By splitting risk and amplifying returns, tranching and leverage together will exponentially expand the addressable market for yield. And we are here for it!
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