Frequently Asked Questions about Strata Markets

Strata Markets is a generalized risk-tranching protocol that brings structured yield products to any on-chain or off-chain yield strategy. By splitting yield into tokenized senior and junior tranches, Strata Markets provides distinct risk–reward profiles tailored to different investor types.

Unlike traditional DeFi protocols where every user earns the same blended APY with hidden risks, Strata Markets makes risk explicit, transparent, and intentional — giving users the power to choose their preferred exposure.

Strata Markets provides on-chain allocators with structured access to yield products across the full risk–reward curve. Other protocols force all depositors to share the same risk. Strata Markets separates this into two clear choices:

• Senior Tranche — suitable for conservative users seeking safe, predictable yields with first priority on cash flows.
• Junior Tranche — suitable for risk-tolerant users seeking higher-yield opportunities and amplified upside.

Both tranche tokens are fully composable and can be used in other DeFi protocols, creating additional reward opportunities.

Strata Markets currently operates on Ethereum, with markets for Ethena USDe, Neutrl NUSD, and Midas mHYPER assets available.

Support for additional networks is planned for future releases. Follow the official Strata Markets channels for announcements on upcoming network expansions.

Risk-tranching is a way to split a single pool of assets or cash flows into distinct layers (tranches), each with a clearly defined risk–reward profile. This allows different users to choose exposure that matches their risk appetite.

Strata Markets implements this fully on-chain by transforming a one-size-fits-all yield into two tokenized, risk-based tranches:

• Senior tranche — a yield-bearing token with priority on cash flows and protection provided by the junior tranche.
• Junior tranche — a risk-bearing token that absorbs losses first in exchange for higher potential returns and amplified upside.

By design, risk-tranching in Strata Markets makes risk explicit and intentional, not hidden in a blended APY.

Strata Markets is a fully on-chain protocol using its Dynamic Yield Split (DYS) mechanism to continuously allocate underlying yield between the two tranches. Here's how it works:

• The senior tranche receives a stable, predictable yield allocation and is protected against underlying strategy risks by coverage from the junior tranche.
• The junior tranche acts as a market-priced, liquid insurance fund — it earns a risk premium from the senior tranche and benefits from amplified upside when the underlying yield is high.

Both tranches are fully permissionless, composable ERC-20 tokens that can be used across DeFi and CeFi.

To deposit into a Strata Markets market:

• Connect your Ethereum wallet to the Strata Markets app.
• Browse the available markets (e.g. Ethena USDe, Neutrl NUSD, Midas mHYPER).
• Choose your preferred tranche — Senior (lower risk, predictable yield) or Junior (higher risk, amplified yield).
• Approve and deposit your underlying asset to receive the corresponding tranche token.

Your tranche token accrues yield automatically. You can also use your tranche tokens in partner DeFi protocols for additional rewards.

Strata Markets issues two types of ERC-20 tokens for each supported market:

• sr-prefixed tokens (e.g. srUSDe, srNUSD, srmHYPER) — Senior tranche tokens representing a stable, protected yield position.
• jr-prefixed tokens (e.g. jrUSDe, jrNUSD, jrmHYPER) — Junior tranche tokens representing a leveraged, higher-yield position that absorbs downside risk first.

All Strata Markets tranche tokens are fully composable and can be traded, used as collateral, or deployed in partner protocols to maximize rewards.

Total Value Locked (TVL) in a Strata Markets market represents the total USD value of all underlying assets deposited across both the senior and junior tranches of that market.

For example, if the Ethena USDe market has $89.24M TVL, that reflects the combined value of all srUSDe and jrUSDe tranche token holders' positions.

Yes. Strata Markets Protocol has undergone multiple security audits by leading firms in the blockchain security space. Audit reports are publicly available in the Strata Markets documentation.

The Strata Markets team is committed to ongoing security reviews as new markets and features are added to the protocol.

No protocol is entirely risk-free. Strata Markets is subject to several categories of risk:

• Smart contract risk — vulnerabilities in the on-chain code.
• Underlying collateral and protocol risk — risks associated with the assets and strategies backing each market.
• Market risk — adverse price movements of underlying assets.
• Liquidity risk — difficulty exiting positions in stressed market conditions.
• Operational security risk — risks related to governance and operational decisions.

The mechanisms to mitigate these risks are detailed in the Strata Markets documentation.

In Strata Markets's architecture, the junior tranche acts as a first-loss buffer. If the underlying strategy experiences losses or yield decreases, the junior tranche absorbs the impact first.

This means senior tranche holders maintain their principal and predictable yield unless losses exceed the total junior tranche buffer — making the senior tranche significantly safer than a direct deposit into the underlying strategy.

In exchange for providing this protection, junior tranche holders receive amplified upside and additional risk premiums when the underlying yield is favorable.

Strata Markets Points are earned by depositing into Strata Markets markets and using Strata Markets tranche tokens across partner protocols in the ecosystem. Points track your participation and contribution to the Strata Markets protocol.

You can view your accumulated Strata Markets Points in the Points section of the app. Points may be used for future rewards programs and ecosystem initiatives.

Yes. One of the core features of Strata Markets is composability. All tranche tokens (sr- and jr-prefixed) are standard ERC-20 tokens that can be:

• Traded on decentralized exchanges.
• Used as collateral in lending protocols.
• Deployed in partner DeFi protocols in the Strata Markets ecosystem for additional yield and Strata Markets Points.

The "VIEW OPPORTUNITIES" section in the Strata Markets app shows all available ways to maximize your tranche token rewards.

Full technical documentation for Strata Markets, including smart contract addresses, architecture details, risk parameters, and audit reports, is available at docs.strata.markets.

The Strata Markets source code is also available on GitHub.

Connect your wallet to the Strata Markets app and navigate to the Portfolio section. There you can see:

• All your current tranche token holdings across Strata Markets markets.
• Your current yield accrual and historical performance.
• Your Strata Markets Points balance.

The Portfolio view updates in real time based on on-chain data.

The Strata Markets team and community are active across several channels:

• Discord: discord.com/invite/sHtZDvTPxB — community support and announcements.
• Twitter/X: @strata_markets — protocol updates and news.
• Documentation: docs.strata.markets — technical guides and references.
• Blog: paragraph.com/@strata — in-depth articles and research.