The Lorenzo Protocol aims to revolutionize DeFi by taking Web3 away from speculative and unstable yield farming toward secure, structured asset management. Lorenzo brings the much-needed bridge between TradFi and DeFi as it builds out the foundational layer for the next generation of on-chain banking that is transparent, stable, diversified, and yields real income. The aim is not just to bring more capital into Web3 but to package complex financial strategies into simple, tokenized products anyone can use to create sustainable passive income.
The centerpiece of this new model is the On-Chain Traded Fund, or OTF. Similar to traditional ETFs and managed funds, OTFs are decentralized investment products but run completely through audited smart contracts. This lets Lorenzo offer sophisticated strategies in a secure and composable DeFi format.
One strong example includes the USD1+ OTF, which gives stablecoin holders a source of passive income. It pools returns from three main sources: Real-World Assets, like tokenized U.S. Treasury bills and private credit; Quantitative Trading strategies, such as arbitrage and market-making, executed by approved off-chain partners; and classic DeFi yields derived from lending and liquidity provision. The big innovation here is the combination of off-chain and on-chain execution, with results fully reported back on-chain for verification. This approach provides a more diversified, less volatile way to create what amounts to bank-like, passive income that is paid out in the USD1 stablecoin.
Lorenzo's FAL performs the tasks that would be managed by a human fund manager, securing and operating complex strategies. When a user deposits in a Lorenzo vault, FAL automatically manages capital allocation over the strategies based on pre-set risk rules, oversees execution through secure custody and regulated exchange systems, and reports all performance and updates directly to the on-chain NAV. For users, this creates the opportunity to gain exposure to sophisticated strategies through the holding of a token-such as sUSD1+-without huge capital or deep technical knowledge. It is transparent, verifiable, and stored completely on-chain.
Lorenzo also seeks to change the paradigm in which yield is generated with Bitcoin. For much of its existence, Bitcoin has been predominantly a passive store of value, kept idle by its users or trusted to centralized services for yield. Lorenzo aims to turn BTC into a productive asset by means of liquid staking derivatives. In cooperation with such protocols as Babylon, users can stake BTC to earn yield as a contribution to network security. Lorenzo issues key products, including stBTC, a liquid staking token that is redeemable for BTC 1:1 and can be used across DeFi, and enzoBTC, which pursues higher returns through diversified on-chain strategies. In this way, Bitcoin shifts from a static asset to a productive component in decentralized finance.
The BANK token is central to the protocol's economic model. With a total supply of 2.1 billion, BANK holders become the real stakeholders in the system. BANK enables governance voting, can be locked to produce veBANK for greater voting power and rewards, and receives a share of protocol revenue. Value from OTF fees and performance is directly linked to BANK through staking rewards and, in the future, mechanisms like buybacks. This creates a strong link between product growth and token value, supporting long-term sustainability.
In all, Lorenzo is not only enhancing existing models of DeFi but is building an on-chain institutional-grade financial system. From diversified yield through OTFs, to simplifying complex financial management via the FAL, to unlocking new use cases for Bitcoin, Lorenzo fuses the reliability of traditional finance with the transparency and accessibility of DeFi. This positions Lorenzo as a foundational piece of the future decentralized financial landscape.
@Lorenzo Protocol #lorenzoprotocol $BANK
