Adjusted risk-tranching product provides different levels of risks tolerance combining several assets in portfolio

cointelegraph.com:

Decentralized finance (DeFi) could become the most radical development to come of blockchain technology and cryptocurrencies by potentially ushering in a new foundation for global finance. 

One of the projects that set some early precedents for DeFi was MakerDAO, which pioneered the use of having a distinct token for governance, with MKR, and a stablecoin backed by cryptocurrency as collateral — DAI. Next came Compound (COMP), which let customers borrow and lend select cryptocurrencies using a marginalized system that controlled collateral risk.

These early developments have led to the DeFi market we see today, with many yielding products seeming to have consolidated into one of three variations. There is the standard deposit/lending program, most commonly used by the average DeFi user, in which they simply deposit or lend out their tokens in return for a yield.

Those among the more advanced may use decentralized exchanges (DEXs), in which users stake their tokens into a liquidity pool, or might also prefer yield aggregators. Each caters to users with a different risk appetite, with the risk-averse choosing lower stablecoin yields versus the more risk-tolerant, likely willing to risk more for the higher yield of liquidity pools.

Now come products that allow even the more risk-averse to invest in riskier products without the danger of principal losses, giving it a much higher appeal than standard low-yield products. Waterfall DeFi offers structural investment products, in which pools of yield-generating DeFi assets are packaged into three different “tranches.” Each is given seniority based on expected yield, risk and maturity.

The tranche seniority is determined by the method of capital distribution, in which cash flows