← Documentation home

Learn

Tranched Vaults

A Tranched Vault is a wrapped Morpho V2 vault that splits its return stream into Junior and Senior share classes.

Senior vs junior

	Senior (`lcSEN`)	Junior (`lcJUN`)
Role	Protected yield	First-loss buffer
Yield in normal conditions	`underlyingAPY − premium`	`underlyingAPY + premium × (senior ÷ junior)`
Premium flow	Pays a continuous premium to junior	Receives a continuous premium from senior
Loss exposure	Untouched until junior is exhausted	Absorbs underlying losses first
Cap on size	Capped at 4× junior at deposit time	No upper bound — more junior lifts senior's cap
Withdrawal notice	5 days	10 days
Best for	Treasuries, DAOs, conservative allocators	Market makers, risk-seeking DeFi users

Why a curator would launch one

A Tranched Vault extends a curator's strategy to a wider audience:

Conservative lenders - treasuries, DAOs and risk averse allocators who want first-loss protection on their lending strategies.
Risk-seeking lenders - risk seeking allocators who prefer amplified yield in exchange for providing first-loss protection.

Learn More

Protection model - the waterfall in full.
Withdrawal notice - why both sides need a notice before exit.
Fees - protocol fee, curator fee, keeper-side withdrawal fee.
Premium rate changes - how premium setters, floors, and PRMs work.