A Guide to Struct Finance Open Beta
Welcome to this practical hands-on guide for Structs Open Beta, designed to provide answers to your questions and help you navigate the platform seamlessly.
Our USDC Genesis Vaults are launching this week, and this guide will function as a walkthrough to make sure you can easily maximize these vaults in an effective manner.
This is the first step of many in bringing Structured Financial Products to DeFi in a user-friendly way.
Let’s get started!
Step 1: Markets Overview
Upon accessing the Struct Finance Open Beta you will land on the Markets interface.
This page is intended to be similar to trading pair markets on a DEX:
just as trading pairs (such as BTC/ETH) are composed of many different liquidity pools with different TVL and returns, these markets (like BTC.B-USDC) are composed of many different vaults that you can choose to deposit liquidity.
Much like on an aggregator like Dexscreener, each market is populated by several vaults with different TVLs and APRs — the reason for this difference is multiple:
- They were created at different times.
- They were created using different parameters and fixed vs variable tranche ratios.
- Some vaults are boosted so that users could get familiar with them during our Beta!
The Markets interface presents essential data about the available liquidity pools, the platforms, the TVL, and the yields for the fixed and variable tranches that are contained within.
If you have been following us by now you should be pretty familiar with tranches, but fear not, here’s a quick recap: tranching refers to splitting a source of yield into different parts, called tranches.
Tranches allow us to tailor investments’ risk profiles to match the varying risk and return preferences of our users.
Currently, every vault on Struct Finance offers two different tranches:
- The lower-risk (fixed) tranches: these are more secure and will receive a prioritized return as fixed cash flow;
- The higher-risk (variable) tranches: these offer amplified returns through leveraged exposure, but payments are made after the fixed tranche.
Step 2: Choosing a Market
Select a market denoted by its token pair (currently limited to GMX): for this example, we have selected the USDC-BTC.B market.
Currently, our Beta supports tokens that are part of the GLP index.
In the near future, we anticipate that our users will be able to find relevant opportunities and have the ability to create permissionless Tranches on Underlying Assets.
By selecting a Market that interests you, in this case USDC-BTC.B you will be able to explore the different fixed/variable tranches available for liquidity provision, along with their respective yields and their period.
Step 3: Choosing a Vault within a Market
Choose a Vault that has a blue symbol on its left, which means it is still open for deposits — details on the meaning of these symbols can be found
After you select a vault, the interface provides you with the option to deposit into its fixed or variable side.
In this case, we can see that the LP has an APR of 12.95%, and we can explore the different vaults where they can provide liquidity.
Let’s have a practical example using the fixed BTC and variable USDC Vault:
Upon clicking on a vault, a pop-up window will open on the right side of your dashboard. In this window, we are able to observe all the most important information, including the period when the vaults are open.
Subscription Period
The subscription period is the period where deposits are open.
In the example below, it is possible to deposit funds in the vault until the 15th of June. This is the Subscription Period.
There’s a handy timer on the upper right side of the window to remind you of when the Subscription Period closes for any given vault
Term Period
The term (maturity period) refers to how long the deposits remain inside a vault after the subscription period has ended
Following this, the Vault will mature over 4 weeks, ending on the 13th of July. This is the Term Period, which is the period denoted in the center of the panel on the right.
Step 4: Choose between Fixed or Variable Tranche
Using the panel on the right, users will be able to decide whether they want to deposit liquidity on the Fixed Side, using BTC, or on the Variable Side, using USDC.
How do I decide between a Fixed and a Variable Tranche?
- If you are looking for leveraged returns that are perhaps higher than what we would get by simply holding the underlying asset then the Variable Tranche is for you.
- If, on the other hand, you are keen on getting passive fixed-income returns on your stablecoin collateral, then you should go for the Fixed tranche.
We can also compare the estimated returns of the two positions:
- The Fixed BTC side will have an APR of 8.88%
- The Variable USDC side will have an APR of 17.02%
Once selected the tranche according to our risk propensity and desired returns, we will then approve and confirm the deposit.
The funds will now stay in the vault for the whole length of the Term.
Why are there three different symbols and what do they mean?
You may have seen that Vaults are assigned a colored symbol.
If you hover your mouse over the symbol it will overlay a short explanation!
These symbols are divided by colors and have to be interpreted as follows.
Blue Arrow Symbol: Open Vaults
Vaults are open for deposit and haven’t started producing yield yet.
You can select the preferred tranche and deposit liquidity.
The panel on the right provides information on the date when the subscription period ends, as well as the Estimated Returns, Total Deposits, and the term period of the vault, which is referred to only as a “period” in this window.
If you want to deposit liquidity you will do so in a Blue Vault, as mentioned in Step 2.
Blue means “deposit”.
Red Square Symbol: Locked Vaults
The subscription period has terminated, and the vault is locked and working as intended. Deposits are locked for the remainder of the term to accrue yield. Any refunds can be claimed.
In fact, by selecting a Vault with a red icon, aside from “Your Withdrawals” you can also find a section for “Refund Amount”.
Red means “busy”.
Green Arrow Symbol: Matured Vaults
Green means that the Vault has matured: the deposit period is terminated, and the yield from the vault can now be claimed.
Green means “claim”.
In fact, using the panel on the right we’ll be able to verify our Realized Returns (Yield) and withdraw our funds.
Users can withdraw their funds from the vaults once the term ends, while the oversubscribed deposits can be redeemed immediately after the subscription period ends.
Oversubscribed Tranches
Deposits in a vault could be refunded if one tranche gets oversubscribed in comparison to the other after the subscription period. Any excess deposit will need to be redeemed by depositors of the oversubscribed tranche.
Since vaults require that tranches are divided in a 50/50 ratio, once the subscription period is over, the deposits on the fixed side have to be equal to the deposits on the variable side.
Let’s now assume that when a Vault opens there’s $100 that is being subscribed to the Fixed Vault and only $50 that is being subscribed to the Variable Vault.
Since both tranches require the same amount of liquidity, any surplus in one tranche will be refunded to the last depositor in that tranche, ensuring an equal balance is maintained after the subscription period ends.
Why the 50/50 Ratio?
The initial ratio between the Fixed and Variable tranches will be set to 50/50.
On Struct Finance, the Fixed and Variable tranches are counterparties to each other in our Vaults.
The rate of one will inevitably affect the other. In the creation of new structured financial products, having a balance between the fixed rate APY and the variable one is fundamental to be able to attract liquidity on both sides.
There are mechanisms to alter this balance, such as the introduction of leverage, by adjusting the ratio between the two tranches.
For example, the current ratio in Struct Finance is 50%, which means that the variable tranche can achieve a maximum of 2x leverage (as depicted in a scenario where fixed is at 3% and variable is about 6%).
By reducing the Variable Tranche’s proportion to 10% of the total, the possible leverage will be increased to 10x. This explains our reasoning behind proceeding with a 50/50 ratio.
We anticipate launching Vaults with different ratios in the future, enabling more leverage and yielding higher returns for the Variable tranche.
Why is there a Deposit Limit?
You may have noticed that for these initial pools, we have set a limit for the total deposit. This limit will serve initially to allow us to calibrate the platform and ensure a top-notch user experience for our users.
We reserve the right to gradually scale up the liquidity in the vault in response to demand and market conditions.
Conclusion
In response to escalating demand for sophisticated, customizable investment tools in DeFi, we are simplifying the creation of a structured product to be as easy as depositing liquidity.
What were once intricate finance products confined to institutional investors are now accessible to everyone. Choose your markets, your vault, and your tranche: craft your strategy based on your risk propensity and take advantage of diversified investment opportunities in DeFi.
In the upcoming weeks, you can expect our full product launch for this week, and the addition of certain upcoming vaults which may be boosted.
Boosted vaults?
Available for a limited time only.
Best be early Struct fam: fixed yields are one of best hedges against volatile and uncertain market conditions.
Bull or bear — fixed yields are fixed, so you can count on a consistent return on your deposit.
Don’t get swept away by all the price movement this week!
