Strata
About
Strata is a generalized risk-tranching protocol that splits yield from underlying on-chain and off-chain strategies into two tokenized tranches — senior and junior — each with distinct risk-reward profiles. The senior tranche offers capital preservation with a guaranteed minimum yield floored to a benchmark rate and first-loss protection from the junior tranche, while the junior tranche provides leveraged upside to the underlying yield by absorbing excess risk as a liquid insurance pool. Built with a modular, chain-agnostic architecture, Strata transforms one-size-fits-all DeFi yields into structured, risk-adjusted products for both conservative and risk-tolerant investors.
Where Does Yield Come From?
Strata generates yield by pooling deposits from both senior and junior tranche holders and deploying them into yield-bearing strategies (for example, Ethena’s sUSDe, Neutrl NUSD, Midas mHYPER, or Midas mM1-USD).
The core mechanism is the Dynamic Yield Split (DYS). It divides the actual yield earned between the two tranches based on four inputs: the underlying yield rate, a benchmark rate (such as the average lending rate for USDC and USDT on Aave v3 Core for the USDe market), the ratio of senior TVL to total TVL, and risk-premium parameters set by the protocol (a baseline, a maximum extra amount, and a scaling factor).
How the split works in practice:
- Senior tranche earns a guaranteed minimum yield tied to the benchmark rate, plus a share of any upside from the underlying yield — after a risk premium is paid to the junior tranche. The premium grows as the senior TVL ratio rises, because larger senior deposits mean the junior tranche absorbs more potential losses.
- Junior tranche receives the base underlying yield plus the risk premium from the senior tranche, scaled by the TVL ratios. This gives junior holders leveraged upside when the strategies perform well.
Protocol revenue comes from two fee types:
- Performance fee — a fixed percentage of the yield generated, paid to the treasury.
- Redemption fee — charged when holders redeem their tokens (to discourage short-term trading). This fee is split between tranche holders and the treasury.
For the Ethena USDe market, the performance fee is set to 0%, the senior redemption fee is 0.025%, and the junior redemption fee is 0.10%.
Safeguards automatically halt senior minting or junior redemptions if the senior coverage ratio (total TVL divided by senior TVL) falls below a predefined threshold — protecting the system from becoming too risky for senior holders.
Audits
| Audit / Date | Findings | Verdict |
|---|---|---|
Quantstamp18-03-2026 - 20-03-2026 |
| The audit uncovered 5 issues related to the Midas protocol integration, all of which the client fixed or acknowledged, with the medium-severity finding (incorrect deposit accounting) being the most consequential; the codebase is better positioned for deployment after these remediations, though users should note the acknowledged oracle staleness risk. |
Cyfrin09-01-2026 - 15-01-2026 |
| Cyfrin's audit found six medium-severity issues in Strata's shares-cooldown mechanism, all of which were resolved by the protocol team, eliminating the most critical risks of exchange-rate manipulation, DoS, and bank-run dynamics before deployment. |
Quantstamp10-11-2025 - 13-11-2025 |
| The Strata Tranches update audit identified only a single informational finding—a missing time delay for fee updates—which was promptly fixed, and no high, medium, or low severity issues were present, reflecting a well-designed and thoroughly tested codebase update. |
Quantstamp09-10-2025 - 17-10-2025 |
| The audit uncovered no high or critical vulnerabilities, with the single medium-severity finding (decimal precision in swaps) and all other issues addressed by the team, indicating the protocol was in a strong security posture at the conclusion of the engagement. |
Guardian22-09-2025 - 29-09-2025 |
| The audit uncovered a critical accounting mismatch and several high-severity logical flaws that were all resolved, but the report recommends a follow-up independent review at a finalized commit before deployment given the number of critical/high issues and later code changes. |
Cyfrin26-05-2025 - 28-05-2025 |
| Cyfrin identified one critical vulnerability that could drain sUSDe protocol balances and one high-risk edge case affecting yield-phase withdrawals, all of which were resolved before deployment; the residual findings are low-severity specification violations and code-quality improvements that do not present material risk to post-mitigation usage. |
| The Quantstamp audit report for Strata could not be accessed as it is behind a Papermark email authentication wall, making it impossible to evaluate the protocol's security findings from this source. |
Backers
According to the Strata website, the protocol is backed by the following investors/backers (listed under the "BACKED BY THE BEST" section): Faction, Halo Capital, Ethena, Anchorage Digital, Heartcore, and Nayt Technologies. No specific funding rounds, investment amounts, or dates are disclosed on the official website or documentation.
Legal
Legal form
Corporation
Registration jurisdiction
Delaware, USA
Status and notes
The operator of the user interface (strata.markets / strata.money) is Frontera Labs, Inc., a Delaware corporation. Terms of Service and Privacy Policy are published at docs.strata.markets/resources/terms-of-service and docs.strata.markets/resources/privacy-policy; contact: [email protected]. The underlying Strata Protocol is a set of autonomous smart contracts licensed under BUSL-1.1, with no disclosed legal entity operating the on-chain protocol. Section 15 of the Terms of Service and Section 11 of the Privacy Policy mention a potential future transfer of operation to a Cayman Islands foundation or governance entity.