Crypto Gloss

Struct Finance

Struct Finance is an Avalanche-native structured product protocol offering interest rate tranching — splitting a yield-generating position’s returns into a Fixed Rate tranche (protected, predictable yield) and a Variable Rate tranche (leveraged, higher-upside yield), allowing users to express risk preferences within a single yield source without exiting DeFi.

Overview

Most DeFi yield is inherently variable — lending rates fluctuate with utilization, liquidity mining rewards depend on token price, and LP fees depend on volume. For yield-seeking users who prefer certainty (DAOs, structured traders, conservative DeFi users), variable yield is a disadvantage. Struct Finance introduces interest rate tranching to Avalanche: take a yield source (AVAX staking, GLP yield on Avalanche, Benqi lending yield), split it into a senior FIXED tranche and a junior VARIABLE tranche. Fixed tranche buyers accept a known yield; variable tranche buyers accept the remainder — which can be amplified relative to their capital deployed.

Core Mechanism: Tranching

Here’s how this works in practice.

Anatomy of a Struct “Structure”

Every Struct product (called a “Structure”) contains:

1. A Yield Source

  • Examples: AVAX staking (ggAVAX/sAVAX), GLP yield on Avalanche, Benqi supply APY
  • The yield source generates a gross APY over the investment period

2. Senior Tranche (Fixed Rate)

  • Investors deposit USDC (or the senior asset)
  • Receive a guaranteed fixed APY (e.g., 8%) for the duration of the Structure
  • Capital is protected: if total yield exceeds guarantees, surplus goes to junior tranche
  • If total yield is insufficient to cover fixed rate, junior tranche absorbs the shortfall first

3. Junior Tranche (Variable Rate)

  • Investors deposit AVAX (or the yield source token)
  • Receive whatever yield remains after senior tranche is paid their fixed rate
  • Variable rate > underlying base yield when markets perform well
  • Variable rate < underlying base yield (potentially significantly) when markets underperform
  • Amplified exposure to the yield source’s performance

Waterfall Structure

“`

Gross yield from underlying

↓

Pay senior tranche fixed rate first (e.g., 8%)

↓

Remaining yield goes 100% to junior tranche

“`

If gross yield = 15%, senior = 8%, junior gets 7% but on a smaller capital base → higher effective APY on junior capital.

If gross yield = 5%, senior still gets 8% (funded by junior tranche’s principal if needed) → junior may receive < 5%.

Struct Products

The protocol’s products are described below.

GLP Tranches (Avalanche)

GLP (GMX’s liquidity token, deployed on Avalanche via GMX) generates yield from:

  • Trading fees
  • Borrowing fees from leveraged traders
  • Liquidation revenue

Struct creates Fixed/Variable GLP Structures:

  • Senior (USDC) — deposits USDC, earns fixed 8-12% APY on duration (7-30 days)
  • Junior (wBTC/WETH/AVAX) — deposits volatile assets, earns leveraged GLP yield

AVAX Staking Tranches

  • Senior (USDC) — fixed yield on AVAX staking yield stream
  • Junior (AVAX) — variable yield amplified relative to raw staking APY

Duration and Lifecycle

Structures are fixed-duration (e.g., 7-day, 30-day, 90-day):

  1. Subscription period — both tranches raise capital (senior USDC + junior volatile)
  2. Investment period — capital deployed to yield source; fees accumulate
  3. Settlement — gross yield calculated; senior paid fixed rate; junior receives remainder
  4. Redemption — users claim their tranche proceeds

Non-rolling structures: users re-enter manually if they want to continue exposure.

SP Token

SP Token is Struct’s governance token:

  • Governance votes on supported yield sources, fixed rate parameters, protocol fee percentage
  • Staking for protocol fee revenue share
  • Treasury management for Struct DAO

Sources

  1. Struct Finance Documentation and Litepaper — Struct Finance Team, 2022–2024. Core Struct documentation covering the tranche architecture (senior fixed/junior variable waterfall design), lifecycle of a Structure (subscription → deployment → settlement), supported yield sources (ggAVAX staking, GLP on Avalanche, Benqi lending), the SP token governance system, and the mathematical derivation of how tranching amplifies junior tranche yield vs underlying base yield.
  1. “DeFi Structured Products: BarnBridge vs Struct Finance” — DeFi Research / Avalanche Analytics, 2023. Comparative analysis of Struct Finance (Avalanche) and BarnBridge (multi-chain, earlier) as DeFi’s leading interest rate tranching protocols — examining architecture differences (BarnBridge’s SMART Yield vs Struct’s GLP/staking tranche model), yield source breadth, fixed rate competitiveness against TradFi alternatives, user adoption, and the specific advantages of Struct’s Avalanche focus.
  1. “Fixed-Rate DeFi: Struct’s Role in Yield Certainty for Institutional and DAO Users” — Avalanche Foundation / Institutional DeFi Research, 2024. Analysis of Struct Finance’s use case for institutional yield seekers, DAO treasury management, and risk-averse DeFi participants — examining whether DeFi structured products can genuinely compete with TradFi fixed-income alternatives (money market funds at 5%, T-bills at 4-5%), documentation of Struct’s actual fixed rate vs TradFi benchmarks, and investor personas using Struct’s senior tranche.
  1. “GLP Tranching: Struct’s Core Yield Source and Variable Rate Mechanics” — Struct Finance / GMX Analytics, 2023. Deep analysis of Struct’s GLP-based Structures — GLP yield composition (trading fees, borrowing fees, liquidations), how GLP yield varies across market conditions (high volatility = more trading = higher GLP yield; bear market liquidations = spike GLP yield; stable markets = consistent but lower yield), the resulting distribution of junior tranche returns across different market environments, and comparison of GLP exposure through Struct junior tranche vs direct GLP holding.
  1. “Struct Finance Avalanche Ecosystem Integration: ggAVAX, Benqi, and Beyond” — Struct Finance / Avalanche Ecosystem Research, 2024. Analysis of Struct’s integration with the broader Avalanche DeFi ecosystem — ggAVAX (GoGoPool’s liquid AVAX) as Struct yield source (AVAX staking tranches), Benqi lending yield tranching, and future yield source roadmap; examining how Struct creates a DeFi composability layer by accepting Avalanche DeFi tokens as junior tranche deposits and paying USDC fixed rates to senior tranche depositors.

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