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 Ethena's synthetic dollar into two distinct assets:

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

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

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 the yield generated by the protocol on the pooled collateral by staking USDe. Its yield has a floor equivalent to the Sky Savings Rate (SSR) ensuring uncapped upside exposure to sUSDe APY with minimum guaranteed yield. In extreme scenarios (stJLP TVL ~ 0, sUSDe APY < SSR), stUSDe yield will be equivalent to the sUSDe yield.

• 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 stJLP 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 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.