The first time I See “Lorenzo Protocol (BANK),” I pictured a bank vault. Big door. Steel. Then a friend said it’s about “yield,” like it’s a tap you can turn on. I blinked. Yield from what, exactly? Where does the water come from?
Lorenzo’s answer is not one pipe. It’s a mix. Part old world, part DeFi, part trader math. The goal is to bundle it into tokens you can hold and move, kind of like a fund share that lives on a chain. They call one wrapper an On-Chain Traded Fund, or OTF.
One source is U.S. Treasuries. That’s a fancy name for IOUs from the U.S. government. They pay interest because time costs money. Lorenzo points at “tokenized treasuries,” which is just a way to put a claim to that return into a token. You’re not holding a paper bond. You’re holding a digital receipt that tracks it. In products like USD1+ or sUSD1+, yield can show up in two simple ways: either your balance grows over time (that’s “rebasing”), or the token’s price slowly rises (that’s “NAV growth,” like a fund price going up).
The next source is DeFi liquidity. DeFi means finance run by code. If traders need coins to swap, or if borrowers need to borrow, those markets pay for the use of funds. Fees and lending rates are the rent. It sounds easy until a bad day hits. Prices jump, pools shift, and you can end up holding more of the coin that fell. That loss has a name, “impermanent loss,” which is a scary label for a simple idea: the mix changes, and you may be worse off than just holding. So the work is picking safer lanes, then leaving on time.
Then there’s the third source: quant models. “Quant” just means rule-based trading. Think arbitrage, where you buy low on one place and sell high on another, or market-neutral trades that try to earn spreads while staying less tied to price swings. Lorenzo calls the routing brain the Financial Abstraction Layer. Big words, but the idea is plain: take deposits into vaults, send funds to chosen paths, track the results, and settle the gains back on-chain.
So where does BANK fit in all this? It’s not the water. It’s the knob. BANK is used for votes and for steering rewards, often through a locked form called veBANK, where locking gives you more voice but less quick exit.
In the end, Lorenzo is trying to make yield feel less like a guessing game and more like a menu. Still risk. Just clearer risk.
@Lorenzo Protocol #LorenzoProtocol $BANK
