Risk Tokenization Protocol Launches on Polygon!
BarnBridge, a risk tokenization protocol, is launching its SMART Yield and all-new SMART Exposure applications on Polygon. BarnBridge is a protocol for reducing DeFi risks like inflation, market prices, cash-flow volatility etc. The two applications are set to mitigate the risk of lending market yields and portfolio concentration risk, respectively.
“SMART” for both the DApps means Structured Market Adjusted Risk Tranches, meaning that the risk is distributed or adjusted in the form of Tranches. Each tranche is a pool of users with a defined risk profile with regards to their funds on a given money market, say Compound, or within ERC-20 asset pair position. There are two tranches in SMART Yield, viz. Junior and Senior.
The SMART Yield Junior Tranche is considered to be a higher risk, levered return product, while the Senior Tranche is considered to be a lower risk, fixed return category. Now, should the variable rate in the underlying debt pool should decrease, the funds (both yield earned and principal provided) from the Junior Tranche will be salvaged to fulfill the Senior Tranche’s need of fixed return, and vice-versa, should the variable rate of the underlying debt pool increase, the excess of the fixed return of the Senior Tranche is allocated to the Junior Tranche.
SMART Exposure is the latest application from BarnBridge, which provides users with automated position rebalancing for any supported ERC-20 pair. The ratio between two tokens is fixed, say, 60:40, regardless of their price fluctuations, as the tokens are bought and sold to maintain the ratio. Within SMART Exposure, tranches refer to different ratios supported (up to 5) between any two pools of ERC-20 assets.
SMART Yield and SMART Exposure are together set to introduce new risk mitigation strategies to DeFi on Polygon. Smart Yield offers fixed and levered variable yields to depositors into lending markets like Aave or Compound; SMART Exposure automates position management. Polygon is set to provide seamless transaction speeds and ultra-low gas prices, through full-stack scaling. Additionally, the money markets on Polygon are set to widen the user base of BarnBridge
BarnBridge is a risk tokenization protocol for DeFi. Its applications allow users to select from opposing pools, referred to as tranches, and take positions on risk factors like interest rates or asset prices. Its first application, SMART Yield, offers fixed and levered variable yields on stablecoins deposited into underlying lending markets like Aave, Compound, and C.R.E.A.M. Finance. Within the coming months, its application suite will expand to include SMART Exposure, SMART Alpha, and SMART FIAT. BarnBridge is currently live on Ethereum and on Polygon Network.
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Source : blog.polygon