How Tranching Turns Yield Into Tradable Markets Without Liquidations

🎙️What if leverage did not require liquidations at all and yield became something you can actually trade in real time?

In this episode, Alex sits down with Alan from Covenant Finance to unpack a different way to think about DeFi markets. Instead of isolated positions and liquidation driven risk, Covenant treats risk like a banking system does through tranching, turning the “equity side” into a fungible leverage token that anyone can hold and trade. Alan connects this to how banks create liquidity on top of long duration assets, and why tranching can be a cleaner mental model for crypto yield markets.

They also go deep on the mechanics that make Covenant feel “self balancing” including how the market targets specific leverage ratios, why yield changes ...