THE TOKENIZED CARRY TRADE

Summary from the TLDR Crypto newsletter

The carry trade has existed across four onchain generations: 2020 incentive-subsidized yield farming, liquid staking carry via stETH on Aave at 90-95% LTV, Ethena-style funding-rate carry, and tokenized credit collateral backed by $14.4B in tokenized Treasuries, $8.1B in tokenized credit, and $4.3B in active strategies. The carry math at stage four: a 9% yielding asset at 75% LTV and 5% borrow cost produces 17% ROE at 3x leverage, but carry turns negative near 10% borrow rates. The piece proposes a seven-factor collateral screen covering yield spread, yield stability, price stability, price quality, issuer redemption speed, secondary liquidity, and capacity, applied across asset-backed lending, digital credit, reinsurance, and active strategies.