## Intro As described in the [[Why Build Syntropia?]] section, we divide yield-generation assets into three risk levels (tranches): 1. **Senior tranche (synUSD+)** – for institutional liquidity providers: large deposits, low risk/yield 2. **Mezzanine tranche (synUSD, synBTC)** – degens / HNI providers: medium risk/yield 3. **Junior tranche (synUSDx)** – retail users, risk-aware degens: highest risk/yield ## Why? Nowadays, DeFi already has this concept running implicitly using lending protocols. Let's pick sUSDe (Ethena's yield-bearing stablecoin) as an example: 1. You can **invest directly** into sUSDe and have 1:1 exposure to the asset. That means if sUSDe loses 1% of its value, you will lose 1% (**Mezzanine tranche**). 2. You can **lend** your USD for borrowers to borrow using sUSDe as collateral. If sUSDe loses part of its value, the collateral will be used to compensate those losses at the moment of liquidation (**Senior tranche**). 3. You can become a borrower of USD and use sUSDe as collateral to create leverage and farm more, but you take on leverage exposure. That means if your leverage is 5x and sUSDe loses 1%, you lose 5% (**Junior tranche**). This works well, but it comes with its own problems, like: 1. Borrow rates can spike and leveraged positions will generate negative yield. 2. Lent capital cannot be utilized 100% to avoid locked capital for lenders. ## Solution ![[Drawing 2025-11-16 21.52.36.excalidraw.png]] **Eliminate the lending protocol intermediary** and create three managed assets (e.g., synUSD+, synUSD, synUSDx) that have exposure to the same portfolio of strategies. Let's start with the most obvious one, **synUSD**: Any USDC deposited into this vault is deployed into the strategies. This means that holders have 1:1 exposure to the portfolio. Now let's see how the synUSDx and synUSD+ pair works: 1. Any USDC invested into **synUSD+** is "lent" to **synUSDx** holders. 2. USDC deployed into synUSDx + "borrowed" capital from synUSD+ goes into synUSD to farm the yield. 3. USDC from synUSDx implicitly becomes margin for the leveraged position. 4. Part of the yield generated by the USDC deployed into synUSD is shared with synUSDx holders. Syntropia always aims to keep the following parameters: 1. 5x leverage – you can calculate it by taking Syntropia's synUSD position and dividing it by synUSDx TVL. 2. Share 1-2% of the yield generated by synUSD with synUSDx holders, which means an extra 5-10% of the yield with 5x leverage. 3. In case demand for synUSDx is lower than synUSD+ supply and leverage should be increased to 6x+, the remaining USDC from synUSD+ is deployed to synUSD without the margin. This approach lets Syntropia escape negative yield, control supply/demand, and keep assets balanced in the right proportion while keeping capital efficient and 100% utilized.