@jaibhavnani

I really admire Uniswap. I look up to Hayden. But what has Uniswap done in the last couple of years? I genuinely have zero idea.

Some Royco highlights: - Avant pool pushed to 100% utilization, so the junior (effectively mezzanine) will rise in yields. - APYX still in observation period, but juniors are recovering - sNUSD junior continues to provide significant yield (23.65% APR) https://t.co/pT1iFeNSoy

Royco is still early, but working: - FalconX jr tranche up to 19.8% APR - Staked Neutrl jr tranche saw a big withdrawal, pushing yield to 23.38% APR - apyUSD in observation mode, keeping jrs safe during volatility The first pool went public on May 1. Successful month. https://t.co/OaDZ8ai8Fv

Onchain yields are dead. RWAs ate them. Two years ago, the highest yields were pure DeFi: Ethena funding, lending, LP fees, and token incentives. Most of that has compressed to near T-bill rates now. Neutrl/Maple/USDai have one thing in common: bringing yields from outside the chain. They are growing massively, while pure DeFi is losing.

On APYX, tranches, and the future of risk in DeFi. On APYX: DeFi ran out of yields a long time ago, so we all began importing them. What it seems some folks forget: when importing yields, we also import risks. APYX is an importer: taking baskets of STRC/SATA and selling it onchain via apyUSD/apxUSD. The structure imports risks (STRC/SATA risk, team risk, etc.), but this is exactly what the market has been asking for. So what happened now? Well, some risks have materialized, causing the asset to draw down. As of writing this, both apyUSD/apxUSD have experienced a drawdown (down roughly 1.35% on its backing according to its NAV oracle; down between 5-10% on secondary markets, depending on the asset). Depositors are stuck between a rock and a hard place: 1. Stay, and the assets hopefully recover 2. Or exit at compressed valuations, also realizing all losses On apyUSD tranches: This is exactly the type of setup that tranching is built for. For those unfamiliar, tranching allows risk-off (senior) participants to give up a percentage of their yields to risk-on participants (junior) willing to absorb losses in exchange for higher yields. Tranching is built for assets with risk, like apyUSD. Royco launched apyUSD tranches a few weeks ago. The pool grew to just under $5M in that time. The pool had significant junior demand, with folks happy to absorb the risks in exchange for higher yield. Let’s look at how they’re holding up in this environment: Senior apyUSD: no losses incurred, protected by the junior tranche. Junior apyUSD: unrealized losses (-3.8%) but given a 30 day grace period before they are realized. We're 5 days in, and the jr tranche has already begun to recover. That 30 day grace period (called an observation period in Royco) allows juniors to have a shot at recovery (as has happened in the past with STRC). So what is happening here, inside of Royco? The system is working exactly as intended! On the future of risk in DeFi: With DeFi continuing to import yields from offchain, risks will continue to rise. It is important that participants understand where they sit on the risk spectrum, and participate in products accordingly. Now is a good time to consider Royco junior and senior tranches.