Tranches

Yield aggregator tranches

We seek to simplify the use of investment tranches for users.

And offer the benefits of tranched investments without the overhead.

We seek to do this by absorbing the junior tranches into the DAO and treasury, similar to how banks hold the lowest tranches in tradFi.

Tranched investment strategies

Different strategies and DeFi platforms come with different yields and risks

The top level vault can have multiple strategies with segregated investment percentages for subsequent strategies.

This allows us to hedge risk while maximizing returns and rolling out new strategies and increasing their investment caps gradually.

Additionally the returns for investors in the yield aggregator are hedged by the holdings of the DAO offering greater safety. This is due to the DAO, similar to a bank in a classical CDO holding the junior tranches.

Base rules for investment:

• Only audited contracts

• Live for >30 days

• Only verified contracts

Tranche example:

Top level vault - 100k USDC balance

Strategy 1: 80% debtRatio - 80k invested

Strategy 2: 20% debtRatio - 20k invested

External investors: 80k invested - Tranche A

DAO: 20k invested - Tranche B

In case a new strategy is added, the debt ratios will be adjusted to add it as the new junior tranche with the lowest debt ratio

In case of withdrawals the newer strategies with the lower limits are withdrawn from first.

In this case the DAO backs the safety of the yield aggregator and becomes the owner of the junior lien.

The DAO will tend to withdraw last.

Due to this the DAO also gets first entry into new higher APY strategies. This is also necessary to test, audit and set APY expectations for new strategies

We have 2 distinct types of tranches.

1. User selected investment tranches

2. Treasury backing tranches

User selected investment tranches

Users can self select their deposits based on their own personal risk tolerance and APY wants.

These are by asset and location.

Location

Grade	Location	Generated asset	Withdrawable
AAA	Yield aggregator	yTokens	Yes
AA	Volcano	$HAMMOCK, $COCO	No
AA	MasterChef	None	Yes

Asset class

Safety level	Grade	Details	Potential Assets	APY + upside potential	Withdrawable
Ultra safe	AAA	Stable coins	USDC, DAI, USDT, MIM, FRAX	Low	Yes
Very Safe	AA	Long tail assets	WBTC, ETH, AVAX, FTM, Matic	Moderate	Yes
Safe	A	Rewards LP	$CNC/$ETH LP	High	Yes
Risky	BBB	Bonds	$HAMMOCK	Very high	No
Very Risky	B	Contingent Convertible	$CoCo	Very high	No

Treasury tranches

The treasury will liquidate assets in the following order to maintain the price floor

Grade	Description	Reasoning
AAA	Stables	Lowest upside potential
AA	Long tail assets	Further protection for yield aggregator
A	Yield aggregator tokens	This in essence assumes the yield aggregator business will need to be wound down

Tranche holders

Who	Tranche	Location	Description
User	A	Yield aggregator	Users are exposed to less risky strategies and can exit first
DAO	B	Yield aggregator	DAO treasury holds riskier tranche. Is exposed to more upside earlier and exits later