Refract

DeFi, Refracted

[Refract @RefractProtocol]

Spectrum

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Shedding light on risk

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"The rise of tranching also brings new options for r/r"

[Darren Camas | IPOR Fusion @DarrenCamas]

Tom's 12% feels high. I'm closer to @adcv_ and @TradingAlpinist in the ~8% range, some spread over SOFR plus a basic expected loss premium

But most of the discussion ignores the demand side

DeFi yield today is largely driven by looping:
ETH leverage, vol trades (Ethena), staking carry.
Strip that demand out, ratchet up the rates, and credit demand disappears, bye to APY for depositors

The core issue is what is structurally supporting the lender yield

DeFi needs yield diversification to sustain a risk-adjusted premium

That's where RWAs come in:
Treasuries: ~3–4%
AAA credit: ~5%
Private credit: ~8–12%

But lending to the safest tokenized RWAs won't consistently clear that 8% hurdle on their own.

Looping isn't going away. It's too structurally important

The rise of tranching also brings new options for r/r

imo both have a place going forward

[Refract @RefractProtocol]

See risk and yield in a new light

[Refract @RefractProtocol]

Risk is like energy: it cannot be destroyed, only transformed.

We believe DeFi needs to actively price and distribute risk.

Refract

[Refract @RefractProtocol]

Refract (v): To alter the direction of light, sound, or heat waves as they pass obliquely from one medium to another, bending or separating the wave

[Refract @RefractProtocol]

new DeFi protocol, who dis?