@Lorenzo Protocol is an advanced asset management platform designed to transition complex traditional financial strategies onto the blockchain. It achieves this transformation through the creation of tokenized products known as On-Chain Traded Funds or OTFs . These OTFs function much like familiar exchange-traded funds in conventional markets but operate entirely on-chain offering unparalleled transparency and accessibility.
The core of the protocol is the Financial Abstraction Layer or FAL. This layer acts as a sophisticated backend system that handles custody capital allocation strategy execution performance tracking and yield distribution. It removes the need for individual users or institutions to build and manage their own financial infrastructure allowing them to simply plug into a standardized yield-focused feature. The FAL routes user deposits which are managed through smart contract vaults into diverse strategies such as quantitative trading volatility-based portfolios and structured yield products.
When users deposit assets like stablecoins or Bitcoin they receive liquidity pool tokens or LP tokens representing their share of the underlying strategy in the vault. These tokenized shares can then be traded used as collateral or redeemed at any time providing exceptional liquidity. The protocol's architecture ensures that every transaction deposit and performance metric is visible on the blockchain offering institutional-grade auditability that traditional finance often lacks.
Lorenzo Protocol originally focused on Bitcoin liquidity unlocking its potential as a productive asset within the decentralized finance or DeFi ecosystem through products like stBTC a liquid staking token. Its native token BANK is used for governance incentive programs and participation in the vote-escrow system veBANK. By merging the structured risk management of traditional asset management with the efficiency and openness of Web3 Lorenzo Protocol is establishing itself as an on-chain investment bank creating a new foundation for verifiable real yield in decentralized finance.
