Why did we build CDO.Finance
Current DeFi yield products deliver superior returns compared to traditional market counterparts, through efficiency gains in algorithmic actions via smart contracts. In a low interest rate world, DeFi money markets are consistently attracting new market participants and a steady influx of capital.
Due to its nascent nature, current DeFi products do not offer flexibility in terms of risk-reward adjustments. Granted, this is fine for investors that find the expected yield returns and the level of undertaken risk (smart-contract vulnerabilities, yield variance, impermanent risk) acceptable, but status quo in DeFi offerings currently excludes
a) risk averse investors willing to take on lesser yield in return for less risk (e.g insurance funds, endowment funds, institutional investors)
b) risk tolerant investors that would like to have their capital do more work for them (e.g retail investors that seek yield leverage).
In the interest of encouraging broader DeFi adoption across different investor profiles, CDO.Finance aims to create risk-reward adjusted derivatives from underlying DeFi money legos through the creation of on-chain Collateralised Debt Obligations (CDOs).
A nice waterfall; just like the waterfall yield payouts in CDO