Base Asset Yield − Risk Premium − Liquidity PremiumThe ST has two key benefits: 1) risk protection, and 2) liquidity transformation. On risk protection, if the strategy drops, the JT absorbs the losses first up to its size. On liquidity transformation, the senior benefits from a constantly funded AMM pool with stablecoins and the senior tranche assets. This enables holders to exit without waiting until the redemption. The mechanism ensures there is always a minimum amount of JT (for protection), and LPT (for liquidity), a parameter set at pool initialization. ST assets are both protected and continuously tradable. When looking to exit a position, Seniors have two ways out. They can redeem: claim their share of the market’s collateral at full marked value, paid in the base asset. Or they can sell: trade their shares into the LPT pool for stablecoin liquidity at the current market price. Redemption settles after a queue, while selling is immediate.
This document is provided for informational purposes only and does not constitute investment advice, a solicitation, or an offer to sell any securities or financial instruments. Participation in Royco products involves risk, including the potential loss of all capital deployed. Prospective participants should conduct their own independent due diligence and consult with qualified legal, financial, and tax advisors before making any investment decisions.