Idle + Clearpool: Yield Tranches Expand To Optimism
Paving the way in risk-adjusted institutional credit: Yield Tranches based on Clearpool are now live on the OP Mainnet
After Ethereum and Polygon zkEVM, we are stoked to announce the extension of the Idle product suite to Optimism, the leading Layer 2 Optimistic Rollup network tailored to harness Ethereum’s robust security guarantees while minimizing costs and latency.
The first strategies deployed are USDT Yield Tranches based on Clearpool’s borrowing pools from Portofino and Fasanara Digital, marking the debut of enhanced unsecured institutional liquidity on the OP Mainnet.
Our unwavering commitment to advancing on-chain private credit has been warmly embraced by the Optimism ecosystem. Both Idle and Clearpool have secured a substantial 150,000 OP grant each from the Optimism Governance Council, representing the highest rewards distributed in the latest cycle. These grants will be designated to bootstrap the pools, in addition to the interest paid by borrowers.
A Multichain Path To Advancing The DeFi Credit Market
Launched in December 2021, Yield Tranches were meticulously designed to address the challenge of uniform risk-reward ratios, accommodating varying individual preferences.
Built on Clearpool’s leading marketplace for unsecured institutional liquidity, Yield Tranches emerge as a powerful tool to bridge the gap between lenders with diverse risk profiles and borrowers with varying credit scores, effectively mitigating the inherent risk factors associated with the DeFi credit securitization market.
Liquidity providers within a single pool are no longer forced to share the same risks and returns. With Yield Tranches, users have the flexibility to tailor their portfolios to align with their specific risk preferences: Senior YTs for built-in coverage (as this class offers full spectrum coverage, provided by the Junior class’s liquidity); Junior YTs for boosted yields (as their Senior counterparties reward this class for first-loss protection provided).
After Ethereum and Polygon zkEVM, the OP Mainnet marks the third network where Yield Tranches are now available, paving the way for a more efficient and sophisticated DeFi ecosystem for a wide range of liquidity providers.
OP Incentives Program For Yield Tranches
New USDT Yield Tranches on the OP Mainnet can be accessed by the Idle dashboard at the following links (NB, overly high APYs at launch):
- Senior YT Clearpool — Portofino — current 421% APY
- Junior YT Clearpool — Portofino — current +9999% APY
- Senior YT Clearpool — Fasanara — current 490.8% APY
- Junior YT Clearpool — Fasanara — current +9999% APY
The 150,000 OP tokens received by Idle will be distributed to Yield Tranches’ liquidity providers. The first incentives campaign is set to run for the next 60 days.
These rewards, along with the ones distributed by Clearpool, are strategically poised to drive enhanced and scalable performances. For example, assuming $10 million TVL and a balanced 50/50 liquidity distribution between Senior and Junior classes, Senior YTs can achieve a solid 7.5% APY, while Junior YTs would provide a staggering 22% APY.
The tables below show the illustrative performance projections for USDT Yield Tranches at different levels of total TVL and Senior % over total TVL:
What’s Next
At the core of Yield Tranches design lies a broader vision for the evolving DeFi lending landscape. We firmly believe that in the years to come, global debt activities will transition to on-chain environments, paving the way for programmable and auditable transactions. As this transformation unfolds, users must adeptly manage their exposure.
Idle DAO is committed to building the marketplace that enables this, empowering liquidity providers to tailor, leverage, or hedge their yield portfolios through enhanced risk diversification.
Today’s launch marks a significant milestone in Idle and Clearpool’s steadfast mission to advance DeFi by setting new risk diversification and capital efficiency standards. The integration with the OP Mainnet promises increased throughput, fortified security, censorship resistance, and reduced gas fees, fostering broader adoption of Yield Tranches within an expanded network of lenders.
Our next strides in Optimism will focus on introducing missing DeFi primitives to bolster yield resilience. We’ll concentrate on institutional lending (addressing borrower default), leverage (managing liquidation risk), and options strategies (mitigating drawdown).
About Idle DAO
Idle DAO is a decentralized organization that builds yield automation infrastructure for DeFi. From brand new protocols to institutional and DAOs, businesses of every size use our product suite to optimize capital efficiency and manage their treasuries.
Everyone deserves the best for their idle funds in terms of returns and risks. Over the past four years, Idle has rolled out the features and services, defining and shaping the yield aggregation and risk tranching space. To learn more about Idle’s strategies:
