Nexo

Join the hunt for $12,000,000+ in NEXO Tokens!

Learn More

Struct Finance Launches Tranche-based BTC.B-USDC Vaults

The tranche-based BTC.B-USDC Interest Rate Product was made possible by effectively leveraging Avalanche’s BTC.B (Bridged Bitcoin) for DeFi applications.

Struct Finance Launches Tranche-based BTC.B-USDC Vaults

Share this article

In its ongoing journey to reshape the crypto investing landscape, Struct Finance, a DeFi platform that enables investors to engage with tailored interest rate products linked to digital assets, is thrilled to announce the launch of the BTC.B-USDC Vaults.

The tranche-based BTC.B-USDC Interest Rate Product was made possible by effectively leveraging Avalanche’s BTC.B (Bridged Bitcoin) for DeFi applications. The new vault beautifully complements Struct Finance’s Genesis USDC Vaults, heralding an exciting era in DeFi yield opportunities. Struct Finance built the new vault on top of GMX’s Liquidity Provider Token (GLP) to generate predictable yields for BTC in the form of fixed returns, and USDC in the form of variable returns, while still leveraging a secure asset and minimizing volatility and exposure to other risks.

“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,” said Ersin Dalkali, the Co-founder of Struct Finance.

While Bitcoin continues to dominate the market, its inherent lack of a DeFi layer has traditionally made native yield generation quite challenging. Avalanche has unlocked new possibilities for Bitcoin in DeFi with BTC.B (Bridged Bitcoin). Unlike WBTC that relied on centralized bridges, BTC.B is minted via Avalanche Core — a decentralized bridge — and can be trustlessly bridged across networks using the Layer Zero bridge.

At present, Bitcoin investments in prominent lending pools yield between 0.2–0.5%. Even the stable swap pools offering wBTC-BTC.B products only manage to deliver returns of about 2%. Struct’s BTC.B-USDC product shatters these limitations, offering significantly higher yields.

The purpose of BTC.B is to empower BTC holders to explore DeFi opportunities on the Avalanche blockchain, without the need to acquire secondary tokens or rely on centralized bridges. BTC.B represents BTC coins transferred to the Avalanche blockchain in the form of ERC-20 tokens. With over 6000 BTC bridged and a fully diluted value of $180 million, BTC.B is carving a niche for itself in the crypto arena.

The Bitcoin ETF applications by BlackRock, WisdomTree, and Invesco – three of the world’s leading asset managers – are not just a mere submission. It is a signal that the traditional financial realm is ready to embrace Bitcoin on a new level. Recently, the US Securities and Exchange Commission (SEC) gave the green light to a 2X leveraged Bitcoin ETF, sparking an enthusiastic wave of speculation and anticipation for approval of a spot Bitcoin ETF.

Delta hedging

Amid the highly volatile crypto industry, Struct Finance’s Interest Rate Products allow anyone to split and repackage the risk of any yield-bearing DeFi assets in different parts to fit their risk profile through an innovative process called “tranching.” Every Interest Rate Product is a single vault split into two portions, or tranches that have different return configurations:

  1. A Fixed-return Tranche for conservative investors looking for consistent returns
  2. A Variable-return Tranche for investors with a higher risk appetite seeking superior returns

The yield from the underlying asset flows into the fixed tranche first to ensure predictable returns. The remainder is then allocated to the variable tranche, which gets enhanced exposure to the underlying yield-bearing asset. Compared to the fixed tranche, the variable tranche might accrue more yield, less yield, or no yield.

As part of its BTC.B-USDC Vaults, Struct Finance has implemented a unique approach to managing investment risk: delta hedging. While the fixed tranche takes center stage with its high yield, the variable side of the product offers an additional layer of intriguing complexity and potential.

Upon deployment of funds into the vault, the BTC.B in the fixed tranche gets converted into GMX’s GLP token, setting up a position that’s short Bitcoin against GLP and contributing a negative delta. In contrast, the USDC on the variable side is converted into GLP, which inherently carries a positive delta.

This innovative delta-hedged product design achieves a fine balance between the positive and negative delta forces. It results in a robust strategy that allows investors to confidently navigate the crypto market’s inherent volatility.

This artful interplay of the fixed and variable sides within the vaults opens the doors for investors to tap into the potential of Bitcoin investments like never before. By catering to a diverse range of risk appetites, Struct Finance ensures that both retail and institutional investors can tailor their strategies to maximize their returns, regardless of market conditions.

Share this article

Loading...