Tranching (Risk Tiering)

To accommodate different investor risk profiles, Diamore implements tranching of assets — the division into classes with varying levels of risk and return, similar to traditional securities or Real-World Asset (RWA) protocols in DeFi. In the context of Diamore, tranches can be structured as follows:

• Senior Tranche – Tokens or positions with priority claim to collateral and fixed returns. Investors in the senior tranche receive stable, lower-yield income and have first priority in claims on the underlying assets. This tranche is comparable to a bond or a deposit—minimal risk in exchange for limited return. For example, the gUSD stablecoin, issued against diamond collateral, can be viewed as a senior tranche: gUSD holders are the first to be covered by the assets and can redeem their tokens for a stable $1.

• Junior Tranche – Higher-risk tokens that receive residual income and value appreciation, but bear the first losses if asset prices decline. Diamore’s governance tokens (DIAM) and/or fractional dTokens can be seen as junior tranches: their holders capture all additional profit from diamond price appreciation and high yields from strategies, but if the portfolio loses value, these tokens are the first to be impacted. This tranche appeals to investors seeking higher returns and willing to accept diamond price volatility.

The tranche mechanism is widely used in DeFi protocols. For instance, Centrifuge splits asset pools into Senior and Junior shares: conservative investors allocate to Senior tokens with guaranteed interest, while more aggressive ones invest in Junior tokens for higher yields while accepting first-loss risk.

For Diamore, implementing tranches makes it possible to issue secured diamond-backed bonds (senior tranche) targeted at institutional investors, while the DAO community holds the more volatile but potentially more profitable shares (junior tranche). This structure broadens the investor base and reduces overall system volatility by redistributing risk, while ensuring baseline stability through the senior tranche.