Yield Distribution

Strata Finance introduces a unique Dynamic Yield Split mechanism designed to enhance capital efficiency and risk segmentation for Ethena products. It is a perpetual yield tranching protocol that transforms sUSDe into two distinct assets:

• stUSDe (Senior): Engineered for capital preservation, stUSDe provides a stable yield floor benchmarked to Savings USDS's Sky Savings Rate while retaining potential upside of sUSDe’s yield.

• stJLP (Junior): The Strata Junior Liquidity Pool token offers leveraged exposure to sUSDe’s variable returns, absorbing sUSDe yield volatility in exchange for potentially higher returns.

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How Yield is Distributed

Strata dynamically splits the yield between these two tranches based on the sUSDe yield and how much liquidity is deposited on each side. If more liquidity is deposited into the senior tranche (stUSDe), it gets a higher share of the sUSDe yield and the junior tranche (stJLP) receives higher leverage on sUSDe yield, but if the junior tranche (stJLP) is larger, it gets a higher share of the yield as it provides more coverage to the senior tranche and absorbs more of the yield volatility.

• stUSDe always earns a share of sUSDe yield with floor equivalent to the Sky Savings Rate rate ensuring uncapped upside with downside protection. In worse case/extreme scenarios (stJLP TVL ~ 0, sUSDe APY<sUSDS APY), the yield will be equivalent to sUSDe.

• stJLP receives the residual yield after the Senior Tranche is paid and covers any shortfall when sUSDe yield falls below the Sky Savings Rate. This means sJLP outperforms sUSDe APY in high-yield conditions but may also underperform if sUSDe yield drops below sUSDS yield.

This system balances risk and reward—investors seeking safe and predictable yields choose stUSDe, while those willing to take on more risk for higher returns opt for stJLP.

Every 8 hours, Strata calculates and distributes yield, adjusting allocations to each tranche to match Ethena’s sUSDe reward distribution schedule. This ensures the system remains fair and efficient, adapting to changing market and liquidity conditions.