Struct Finance launches customizable interest rate product for DeFi users.

Struct Finance has launched its interest rate vault and “tranching” mechanism. The decentralized finance (DeFi) platform enables investors to trade structured financial products linked to cryptocurrency. According to a press release, the firm will incorporate various tokens, vaults, pools, and tokenized derivatives to create new products that suit an investor’s risk appetite in a permissionless manner. “Tranching” is an innovative process that allows anyone to split and repackage the risk of any yield-bearing DeFi assets into different parts to match their risk profile. The products are split into two portions, or tranches, with different returns: a fixed-return tranche for conservative investors seeking consistent returns and a variable-return tranche for those with higher risk appetites. The yield from the underlying asset goes into the fixed tranche to ensure predictable returns, while the remainder is allocated to the variable tranche, which receives enhanced exposure to the underlying yield-bearing asset. The press release stated that the lack of fixed-yield returns in cryptocurrencies has deterred both larger institutions and smaller players with more conservative risk appetites. Struct Finance is currently available on the Avalanche layer-1 protocol.

Read more: DeFi Needs More Than ‘Synthetic High-Yield Products’

Edited by Aoyon Ashraf.

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