> For the complete documentation index, see [llms.txt](https://cdo-finance.gitbook.io/cdo-finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cdo-finance.gitbook.io/cdo-finance/cdo-protocol/our-proposition.md).

# Our Proposition

:question: **Why did we build CDO.Finance** :question:

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 **C**ollateralised **D**ebt **O**bligations (CDOs).

![A nice waterfall; just like the waterfall yield payouts in CDO](https://3240608428-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MV_qRrVDr03qY_iXZz3%2F-MW30bl7iDyEg1Cv1our%2F-MW31X9esPIdJ0IqyXaW%2Fpexels-rifqi-ramadhan-788200.jpg?alt=media\&token=4ae487d7-ae14-42d1-9ee0-86fcb78b5a05)