Buttonwood
  • Buttonwood Basics
    • Introduction to Buttonwood
    • First Principles
    • FAQ
    • DeFi for Beginners
  • Learn
    • Glossary
    • Elastic Supply Assets
      • ButtonToken
      • UnbuttonToken
    • Tranche
      • Deposit Flow
      • Redemption Flow
    • ButtonZero
      • System Design
      • Lending
      • Borrowing
    • ButtonAuctions
    • ButtonSwap
      • Core Concepts
      • Pool Interactions
  • User Guides
    • ButtonSwap User Guide
      • Create a Pool
      • Swap
      • Add Liquidity
      • Remove Liquidity
    • ButtonZero User Guide
      • Primer
      • Borrow (Sell & Ask)
      • Lend (Buy & Bid)
      • Redemption
    • ButtonAuctions User Guide
      • Join an Auction
        • Redemptions
      • Create an Auction
      • Settle an Auction
      • Note on Rebasing Assets
    • Provide Liquidity on Uniswap
    • Mint Tranches
      • Mint Tranches via Contract
        • Minting AMPL Tranches
        • Minting ETH Tranches
        • Minting WBTC Tranches
        • Bond List
  • Developers
    • Deployed Contracts
      • Ethereum Mainnet
      • Görli Testnet
      • Kovan Testnet
      • Avalanche C-Chain
      • Base Mainnet
      • Arbitrum
      • Optimism
    • Tranche
      • Tranche
      • TrancheFactory
      • Bond
      • BondFactory
      • UniV3LoanRouter
    • Button Wrappers
      • ButtonToken
      • UnbuttonToken
      • ButtonTokenFactory
      • UnbuttonTokenFactory
    • Audits
    • Bug Bounty
  • Additional Resources
    • Apps
    • Github
    • Discord
    • Twitter
    • Website
    • ButtonZero
    • Zero Whitepaper
Powered by GitBook
On this page

Was this helpful?

  1. Learn
  2. Tranche

Deposit Flow

Users deposit collateral and receive "Tranche" tokens. How does this work?

PreviousTrancheNextRedemption Flow

Last updated 2 years ago

Was this helpful?

In order to tranche their collateral, a user can deposit it into a TrancheBond. The bond goes through its configured tranche ratios, minting tranche tokens proportional to the ratio and the amount of collateral deposited. For example:

  • Tranche ratios: 20/30/50

  • Collateral: AMPL

  • User deposits 1000 AMPL

    • User receives (1000 * 0.2) = 200 AMPL-A Tranche

    • User receives (1000 * 0.3) = 300 AMPL-B Tranche

    • User receives (1000 * 0.5) = 500 AMPL-Z Tranche

After this interaction, the user's position value is still equivalent to holding their original AMPL. However, they now have separate assets which represent different parts of AMPL's risk:

  • The A-tranche represents the safest 20% of AMPL's value

  • The B-tranche represents the middle 30% of AMPL's value

  • The Z-tranche represents the top 50% of AMPL's value and all of its future upside

The user can now sell some of these tranches to change their risk profile.

Diagram of a user depositing into an AMPL bond in return for tranche tokens