🤝 Blockworks: How Onchain Tranching Splits DeFi Yield Into Senior and Junior Risk
A Blockworks deep dive maps how DeFi 'tranching' protocols split a single yield source into a protected senior tranche and a higher-yield, first-loss junior tranche — borrowing the structure of traditional CLOs.
• Onchain versions replicate CLOs' overcollateralization checks but still lack diversification and external credit ratings.
• New entrant Reflect (Solana) uses permissionless slashing and fixed time-locks to protect senior depositors.
• Note: this research was commissioned by Reflect.
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