This week I’m writing about 3 DeFi protocols. One is close to launching, one I just keep seeing everyone starting to talk about and the other is a novel new stablecoin design.
The 3 protocols are:
I’ll also revisit DeFi yields in the last half of this report.
Mezzanine
Mezzanine has been in the works for a while, and it feels like all signs are pointing toward it coming to market fairly soon.
I wanted to take a closer look now that many of the major design decisions have been finalized. The funny part is that even though DeFi Dad and I are investors, there’s still plenty I need to get up to speed on. Mezzanine has changed quite a bit since we initially invested, and I think for the better.
I asked the team for the two or three things they’d want people to take away from Mezzanine. Naturally, they gave me ten.
Absolute keeners.
10 Things To Know About Mezzanine
Almost any yield strategy can be tranched. Lending, loops, LP positions, basis trades, Pendle PTs, RWAs and multi-chain strategies can all be split into different risk positions.
You choose between more yield or more protection. Junior earns a larger share of the yield but absorbs losses first. Senior earns less, but benefits from the Junior capital sitting beneath it.
Curators bring the strategies. Users don’t need to build or actively manage these positions themselves. Curators operate the strategies, while Mezzanine separates them into different risk tranches.
Rates adjust based on where capital is needed. If the Junior buffer is thin, its premium rises to attract more deposits. As the tranche fills, that premium compresses.
Each vault is isolated. A bad outcome in one strategy stays within that vault. Each has its own accounting, yield and loss waterfall.
The loss order is known before you deposit. Junior takes losses first, followed by any optional Mezzanine tranche and then Senior. You know exactly where you sit in the stack.
The goal is to add vaults quickly. Mezzanine is targeting two to three new vaults per month, with each curator bringing a new strategy and potentially a new community.
Prime is the first vault. Users deposit USDC into a strategy built around Hastra’s HELOC-backed PRIME, with additional capital efficiency through Morpho on Ethereum and Kamino on Solana. Mezzanine handles the cross-chain strategy behind a single deposit.
Security has several layers. The protocol has undergone audits from Sherlock and ChainSecurity, formal verification from Certora and an operational security review from OpSek.
I will say, this is pretty much the Rolls Royce security package 🤌
The referral system rewards both sides. Use a friend’s code and receive 10% extra points. Invite someone else and Mezzanine gives you points equal to 10% of what they earn.
A few of my takeaways from this list above:
I somehow didn’t realized that they can literally tranche anything
I think it’s smart that curators will be able to build on top of this and it can lead to some very nicely packaged yields
The Hastra HELOC-backed PRIME seems like a very good place to start
The security process these guys have gone through is truly 🐐’d.
What do the yields look like?
Conservatively the team have been saying that senior prime is targeting 1.5x the yield of prime while being protected and junior prime is targeting at least 2x the yield of prime.
However, I’m told that some internal testing has shown:
Senior 13.6% APY (2x prime)
Junior 30.6% APY (4.7x prime)
👀
I’m a huge fan of further experimentation with tranching in DeFi. I’m also generally bullish on my friends Stephen and Max, and am looking forward to trying this out myself.
Pear Protocol
I’ve known about Pear Protocol for a long time, but recently it’s been coming up again and again on my timeline and wanted to take a more updated look.
What is Pear Protocol?
From my understanding, Pear is basically trying to make pair and basket trading much easier.
Instead of simply going long SOL, you could go long SOL and short ETH. You’re no longer betting that SOL goes up in dollar terms. You’re betting that SOL outperforms ETH.
Orchard, Pear’s main trading platform, executes both perp legs together and tracks them as one position. You can also build larger baskets with up to 15 legs, route trades through Hyperliquid or Lighter, and use Agent Pear to research, build and rebalance positions.
Pear doesn’t custody the funds used for trading. Your collateral stays on the underlying venue, while Pear sits on top as the management and execution layer.
Why is it interesting?
Something I hadn’t really thought about intuitively before going through Pear is that most directional trades contain two separate bets.
Say I’m bullish on a token. I’m betting that I’m right about the token, but I’m also betting that the broader market doesn’t blow up while I wait. You can be completely right that one asset will outperform its peers and still lose money because BTC drops and pulls everything down with it.
Pair trading can help separate those two things. Long ETH and short SOL isn’t necessarily a bet that crypto goes up. It’s more directly a bet that ETH performs better than SOL.
That doesn’t automatically make the trade risk-free or perfectly market-neutral. The legs still need to be sized properly, and funding, liquidation and execution risks remain.
But I think it can be a cleaner way to express a relative view, especially in crypto where so much of the market is driven by rotations between different assets and narratives.
Pear appears to take something that was previously fairly annoying to execute and packages it into one position with unified PNL, ratio-based TP/SL and automatic rebalancing.
How do you actually open a trade?
The process looks fairly straightforward:
Connect a wallet or sign in with email.
Deposit USDC onto the venue you want to trade through. You can bridge or use the built-in fiat on-ramp without leaving Pear. Your collateral remains on the underlying venue.
Choose how you want to build the trade. You can create your own pair or basket, select a prebuilt market basket, or ask Agent Pear to suggest one.
Review the ratio. Pear shows the relationship between the long and short sides, along with metrics like correlation, funding, hedge ratio and suggested leverage.
Choose your order type. You can use a market, trigger, TWAP or ladder order and set TP/SL based on the ratio itself.
Open the position. Both legs execute together, and Pear tracks the combined PNL, funding and any rebalancing activity.
You can also turn on Auto-Rebalance, which attempts to keep the position close to its original target weights as the two sides move.
One other detail: Pear recommends using a wallet that isn’t already trading directly on the same underlying venue. That helps avoid conflicts between existing positions and anything being managed through Orchard.
This example below is a pretty textbook implementation of this trade using long AERO and short UNI from Kool Krypto:
Here’s the chart showing AERO/UNI is looking pretty bottomed
Agent Pear Vault
This is pretty cool.
Pear is also rolling out the Agent Pear Vault, which turns its public pair trading signals into an automated strategy.
Agent Pear scans roughly 250,000 pairs every hour, looking for assets that normally move together but have temporarily drifted apart.
The vault sizes, opens and closes those trades automatically across crypto, stocks, ETFs and commodities on Hyperliquid.
Agent Pear has published 2,884 signals with a reported 64% win rate. Importantly, that’s a paper track record and doesn’t include fees, funding or slippage.
Deposits sit inside an audited ERC-4626 vault on HyperEVM. The trading wallet can trade, but can’t withdraw user funds.
There’s no management fee and a 20% performance fee on new profits above the high water mark.
The first phase is capped at $1 million, with entry and withdrawal fees waived for those initial deposits.
The signals were already public on Pear, but now they’ve productized them into a vault and the agent sizes and trades them for you around the clock. Very interesting.
Full article here:
Pear Vaults
Just as I was about to publish I noticed another new article by the Pear team on their vaults. Link to article below:
Lastly in looking more into this I noticed the PEAR token is doing a migration to Hyperliquid. Details here if curious.
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Solomon
I saw Felipe posting a bit about Solomon and then another friend Kenny Jetski in one of my smaller alpha Telegram chats was mentioning it and I thought it was worth taking a deeper look.
From what I understand, Solomon was a raise via MetaDAO:
What is Solomon?
Straight from their docs:
Solomon builds infrastructure for productive dollars and programmable asset economics.
USDv is Solomon's liquid, reserve-backed onchain dollar. Eligible holders can earn while continuing to hold and use the same asset.
Businesses can integrate USDv and configure how its shared economics are retained, routed, split, or used to fund programs. Asset issuers can use the Solomon Platform to program the economics of their own assets.
Why is Solomon interesting?
Solomon already appears to be getting some early traction. Raydium is committing $1 million of its treasury to USDv and will become its primary home for liquidity.
I think this partnership is a good example of what Solomon is trying to do.
USDv is backed by short term U.S. Treasuries. Those reserves generate income, and Solomon lets platforms like Raydium decide how that income gets distributed across their ecosystem.
That could mean more rewards for LPs, rebates for traders or incentives for teams launching new markets. Solomon tracks the USDv inside supported liquidity positions, so users can continue earning rewards without staking, wrapping or locking anything.
The general idea is to make the stablecoin side of a liquidity pool productive. Instead of the reserve income going somewhere outside the ecosystem, some of it can flow back to the users and markets creating demand for USDv.
It is still early, but Raydium making USDv its primary liquidity partner feels like a strong first signal for what Solomon could become.
Here’s the co-founder of Solomon, Ranga also breaking this Raydium partnership down:
Miscellaneous
I thought this below was cool as well. Coinbase is finally pushing into the tokenized stock arena harder. I’m also noticing Aave v4 has emerged as a very flexible and impressive piece of DeFi infrastructure. I think people borrowing against tokenized stocks will be absolutely huge and even bigger than borrowing against crypto:
A Look at DeFi Yields
We’re looking at 30 day real yields this week with minimum of $10M in TVL (powered by vaults.fyi)
Stablecoin Yields
7 day benchmark stablecoin rates from Portals: 3.07%:
Here’s the top yielding stablecoin vaults (real yields) for the past 30 days:
Min $10M TVL
Checking in on Stablewatch to see the 7-day TVL changes.
ETH Yields
7 day benchmark ETH staking rates from Portals: 2.32%
Here’s the top yielding ETH vaults (real yields) for the past 30 days:
Min $10M TVL
Looping
Here’s a snapshot of the front page of looping this week from yieldz.io (30d APY):
Yield Trading
Taking a look at the front page of Stablecoin yields and RWA yields this week on Pendle:
Stablecoins
11.07% - 20.9%
RWA
17.45% - 10,178% 👀
Thanks for reading!
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