Case studies

Worked compositions

Reconcile the whole position, not only the product name.

Each case study follows capital across multiple contracts or institutions, records the claims created along the way, identifies who pays the return, and traces where a failed assumption changes the final user position.

These are generic educational models. They do not reconstruct one deployed protocol, guarantee market neutrality or positive carry, or replace implementation-specific contract and legal analysis.

Analysis method

Read every composition through four ledgers.

1. 01Inventory the position

   Name every controlled asset, obligation, and layered claim before interpreting the product label.

2. 02Trace the transformation

   Follow the state transitions that move capital or replace one position with another.

3. 03Identify the payer

   Separate the economic source of return from incentives, accounting presentation, and asset-price change.

4. 04Locate the loss boundary

   Ask which failed assumption reaches which claim and who ultimately absorbs the shortfall.

4 complete compositions

Choose the dependency chain to inspect.

1. 01Complete composition

   Stablecoin lending vault

   A complete worked composition tracing how stablecoins, lending, supplier claims, vault shares, borrower interest, controls, and losses connect.

   System span

   Stablecoin asset → lending supplier claim → vault strategy → vault-share product

   Open the worked composition

   Controlled assets

   • Stablecoin
   • Lending-market assets

   Layered claims

   • Lending supplier claim
   • Vault share

   Return source

   Borrower-paid interest can raise vault NAV after realized losses and fees.

   Loss path

   Bad debt, depeg, illiquidity, accounting, governance, or contract failure can reduce or delay vault-share redemption.

2. 02Complete composition

   Leveraged liquid-staking vault

   A complete worked composition tracing how ETH, liquid-staking claims, stablecoin debt, swaps, staking return, and liquidation interact inside a leveraged vault.

   System span

   ETH asset → staking claim → collateralized debt → leveraged vault share

   Open the worked composition

   Controlled assets

   • ETH
   • Borrowed stablecoin

   Layered claims

   • Liquid-staking claim
   • Stablecoin debt
   • Vault share

   Return source

   Consensus rewards and any positive carry remain after borrowing, trading, operating, and fee costs.

   Loss path

   ETH decline, slashing, claim depeg, funding cost, oracle error, or liquidation can amplify loss for vault-share holders.

3. 03Complete composition

   Market-neutral liquidity strategy

   A complete worked composition tracing how an ETH-stablecoin liquidity position, short perpetual hedge, fees, funding, margin, and rebalancing interact.

   System span

   ETH and stablecoin assets → AMM inventory → perpetual hedge → strategy claim

   Open the worked composition

   Controlled assets

   • ETH
   • Stablecoin
   • Margin collateral

   Layered claims

   • Liquidity position
   • Short perpetual position
   • Vault share

   Return source

   Trading fees and hedge settlement compete with funding, rebalancing, execution, and inventory losses.

   Loss path

   Basis, margin, liquidation, nonlinear inventory, liquidity, or venue failure can break the intended hedge and reach strategy holders.

4. 04Complete composition

   Tokenized Treasury fund

   A complete worked composition tracing how an on-chain wrapper claim connects through a tokenized fund, transfer agent, custodian, broker, bank, and law to short-term U.S. Treasury securities.

   System span

   On-chain token → official fund record → custody and banking → Treasury securities

   Open the worked composition

   Controlled assets

   • Cash
   • Short-term U.S. Treasury securities

   Layered claims

   • Tokenized fund share
   • On-chain wrapper claim

   Return source

   Treasury interest and portfolio proceeds reach eligible holders after fund expenses, fees, and distribution rules.

   Loss path

   Record, custody, banking, transfer, redemption, legal, or wrapper failure can separate the token from timely access to underlying value.

Interpretation boundary

Composition creates new dependencies; it does not average them away.

A strategy can reduce one named exposure while adding financing, liquidity, oracle, governance, custody, accounting, or settlement risk. Read the system boundary and loss allocation before comparing headline returns.