Yield Tranches

Products > Yield Tranches
In the financial world, a tranche represents a product split that carries specific features like risk, yields, duration. They are often arranged together to create pools of diversified products or a basket of investments with similar characteristics (risk-return related).
Based on this concept, Idle launched its own tranches primitive: Yield Tranches.
Each tranched asset has its own yield source, with two risk-adjusted investment profiles (Senior and Junior).
Taking the DAI tranche based on the Euler eDAI pool as an example, DAI funds deposited into the Senior and Junior class of that Euler-based product are aggregated into a single pool and then deployed into the Euler eDAI pool.
Tranches allow users to enjoy DeFi yields with built-in protection on deposits for Senior depositors or boosted yield for Junior ones.
Users can decide the strategy according to their risk profile: they can deposit funds into two different tranches (Senior or Junior) in exchange for a token indicating their claim.
Last modified 2mo ago