IRDs
Last updated
Last updated
A big problem that remains in creating IRDs out of illiquid DeFi assets is their potential volatility due to hacks, rug, or simply market movement. This creates higher counterparty default risk leading to high loss expectancy during a waterfall. PIO IRD proposition is a wrapper allowing to delay IRD in exchange for some extra yield allowing hedgers to buy low volatility assets without impact for long-term holders nor lending mechanism with liquidation risks.
Reducing risk allows smaller IM who allow enough capital efficiency for IRDs on these products and a low amount of expected volatility on worst events comparable to some bonds.
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