Struct Finance, a DeFi platform offering tailored structured financial products, is excited to announce the launch of the Tranche-based BTC.B-USDC vault on Avalanche.
To launch the tranche-based BTC.B USDC Interest Rate vault, the Struct team leveraged Avalanche’s BTC.B (Bridged Bitcoin) for DeFi applications. Notably, the team built the new vault on top of GMX’s liquidity provider token (GLP) to generate predictable yields for BTC and USDC in the form of fixed and variable returns, respectively.
Bitcoin investments in prominent lending pools yield about 0.2 to 0.5%. Stable swap pools offering wBTC-BTC.B products manage to deliver returns of about 2%. However, Struct’s BTC.B-USDC product exceeds these limitations offering users significantly higher yields.
Commenting on the launch, Ersin Dalkali, the Co-founder of Struct Finance, stated:
“Our BTC.B-USDC Vaults represent an innovative application of Bitcoin in DeFi. We’re taking full advantage of Avalanche’s Bridged Bitcoin (BTC.B) to bring about a fresh wave of opportunities in the digital asset space.”
Avalanche created BTC.B to allow BTC holders to explore DeFi opportunities without acquiring secondary tokens or relying on centralized bridges. BTC.B is minted through Avalanche Core, a decentralized bridge, unlike wBTC, which relies on centralized bridges. BTC.B is trustlessly bridged across networks using the Layer Zero bridge. Notably, BTC.B represents BTC coins transferred to the Avalanche blockchain as ERC-20 tokens.
As a pioneer of the DeFi revolution, Struct Finance aims to empower users to design their financial instruments. By doing so, Struct hopes its users can unlock a world of diverse investment opportunities. Struct uses an innovative process called ‘tranching’ that allows its users to split and repackage the risk of any yield-bearing DeFi asset into different parts to fit their risk profile.
Each Struct Finance Interest Rate Product is designed as a single vault split into two tranches or portions. Each comes with different return configurations: a Fixed-return Tranche for conservative investors looking for consistent returns and a Variable-return Tranche for investors with a higher risk appetite seeking superior returns.
First, yield from the underlying assets flows into the fixed trance for predictable returns. The remaining yield-bearing asset is then allocated to the variable tranche for enhanced exposure. Note the viable tranche might accrue more yield, less yield, and at a time, no yield.
Notably, Struct Finance has taken things up by implementing a unique delta hedging approach to implement investment risk. This approach aims to balance positive and negative delta forces perfectly. Once the funds have been deployed into the vault, the BTC.B in the fixed tranche is converted into GMX’s GLP token. This sets up a position that shorts Bitcoin against GLP, contributing a negative delta. On the other hand, the USDC on the variable side is converted into GLP, which carries a positive delta. Ultimately, retail and institutional investors can tailor their strategies to maximize their returns despite the prevailing market conditions.
