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Building Capital Markets Infrastructure w/ OnRe Loopscale & Exponent
Recorded: Feb. 19, 2026 Duration: 0:32:57Space Recording
Short Summary
In a recent discussion, Henri, Exponent, and LoopScale unveiled a groundbreaking DeFi strategy on Solana, enabling users to earn leveraged fixed rate returns on reinsurance yield. This innovative approach not only enhances yield opportunities but also signals a maturation in the DeFi market, with a focus on institutional-grade products and improved liquidity across platforms.
Full Transcription
Thank you. Thank you. Thank you. All right, we have our three guests.
Good morning, and welcome back to Solana on XBases.
Yesterday, Henri, Exponent, and LoopScale
launched a new DeFi strategy on Solana that
lets users earn leveraged fixed rate returns on reinsurance yield.
Today we have these three teams on the mic to explain what makes this opportunity so
interesting and what institutional-grade strategies like these can look like on Solana.
I'm going to hand the mic over to each of our guests to introduce themselves,
and then we'll get into the topic.
I'm going to start by handing it over to Mary at LoopScale,
then we'll go to Exponent, and then Andri.
Sweet. Excited to be doing this, and thanks for having us. My name is Mary. I'm one of the co-founders of LoopScale, and we are an order book-based lending protocol on Solana. of all sorts of different collateral assets and support new types of both credit assets and credit
products for kind of this next wave of DeFi that includes these RWAs like Onry as well as
other sorts of tokenized assets. Yeah, hi everyone. I'm Louis, leading BD at Exponent.
Yeah, hi everyone. I'm Louis, leading BD at Exponent. Exponent is the leading yield trading platform on Solana.
A quick TLDR there. We take yield generating assets and let you lock in a fixed return up front.
So that means like fixing the yield rate or you can get leverage exposure on the yield or in some cases the points.
get leverage exposure on the yield or in some cases the points. So yeah, in this case, we're
working with Henri at LoopScale and yeah, excited to be here and chat more about it.
Hey everyone, and thanks for having us. So a little bit about myself. I'm one of the co-founders
here at Henri. What we do is we are a tokenized RWA. We focus primarily on reinsurance. As a reinsurer,
we underwrite two specific types of reinsurance policies. That is property catastrophe,
as well as specialty insurance. And our goal is to bring the premiums or the revenues that
we generate from that business into DeFi, make it fully composable.
that business into DeFi, make it fully composable. And can you start us off by explaining why bring
reinsurance on chain? Why is this such a compelling asset class for crypto folks?
Absolutely. Yeah. So reinsurance itself is one of the largest and I would say structurally
uncorrelated asset classes in the world.
And when I say uncorrelated, I'm not just talking about uncorrelated to crypto markets and its volatility associated with it,
but also with stock markets and the overall interest rates that we see within the general macro scene.
So it's a $800 billion global market.
So it's a $800 billion global market.
And historically, it's been inaccessible to anyone outside of a few institutions
that are writing large checks or providing, let's say,
majority equity into these reinsurance companies.
So for us, the biggest problems that we saw is that crypto itself doesn't lack yield.
It just lacks a diversified yield engines.
And so while most on-chain returns are completely driven by leverage cycles, trading demand,
funding rates, and liquidity incentives, our entire thought process was how can you bring
the premiums from reinsurance by contrast and provide a real-world risk transfer?
And that itself is providing resilient yield that's not correlated towards a market performance.
So in summary, I think the two major things that we're focusing on is expanding the amount of productive assets available in DeFi and specifically on Solana.
And two, our goal is to introduce uncorrelated cash flows into crypto native capital markets.
And walk us through how ONYC works. How do those reinsurance premiums become on-chain,
and what does that actually mean in practice? Yeah, absolutely. So ONYC itself is just a
representation of an economic interest into our underlying reinsurance underwriting pool. So when someone's minting
on YC, the capital that they're deploying into that token, that USDC we actually utilize
to deploy into short duration reinsurance contracts. And so it's typically split between
property cat and specialty insurance. And what happens in the reinsurance world is that the
premium, or let's
say the return that you're supposed to get on that risk transfer for underwriting the policy itself
is paid upfront. And then we model out the claims on that specific premium. So basically assume
claims as losses. And what we do is we bake a certain amount of those losses already. And so what you see on chain, for example, on our yield today, which is 10%, that is net those expected losses.
And then the remainder of it is what we essentially recognize as yield over the duration of the contract, which is usually over a year.
So the underwriting income itself flows into the NAV.
And then you see that translated into the actual appreciating price on YC.
So you basically have a difference between our yield
mostly coming from underwriting, more chain plus, and our collateral yield,
as opposed to, let's say, how we've seen it historically in crypto,
where it's dependent upon a lot of the demand and the reflexive cycles of DeFi.
And you've already seen millions flow into on YC across Exponent and LoopScale. What does this
demand signal to you? I think it signals that the markets are definitely maturing. I think Mary
talks about this all the time, which is why I appreciate her insights on this stuff.
Is that like if we really want to see DeFi translate into being institutional grade credit markets,
we need to not only see the infrastructure improve, but also the quality of asset issuers entering the space improve.
And so we can see from the growth not only on exponent and on loop scale that people are not only interested in holding on YC because of
the uncorrelated yield and the high opportunity for resilient performance, but also because they
can utilize it across DeFi and Solana provides the best infrastructure for people to be able to do so.
So they're going ahead using on YC as collateral, whether they're looping or borrowing other assets
to be able to get more
risk on, completely up to them. But our goal is to really establish that core dynamic of being
a go-to collateral asset in DeFi. Yeah. Speaking of DeFi,
Louis, walk us through what Exponent does with onYC. What are PT and YT assets?
Exponent does with OnYC. What are PT and YT assets? Yes, that'll be a pleasure. So yeah,
as Ayaan mentioned, being that OnYC is yield bearing, what Exponent is doing is we're taking
that yield and giving people a couple of ways to access it. So the first, as you mentioned, is PT.
So this is actually a principal token.
And I'll throw a couple terms out.
But yeah, this is a principal token.
You can think of it like, we often explain it,
like buying a bond or a discount.
So say you'll put in like $95 today,
and then you'll get $100 back at maturity. So the important thing to take away here is that your return is locked in from day one.
There's no variability, there's no surprises.
And then, of course, you can go and loop that, and I think LoopScale will cover that shortly.
And then the second piece of the puzzle is the yield token or YT. So here,
this is capturing that variable yield that the underlying is generating. And it's for people who
think that the yield is going to go up or they're bullish maybe on the points which are associated
with that. And they want to get like leveraged exposure to that. So the underlying asset is the same,
but we're kind of unlocking like two different customer profiles
or two different ways to interact with that asset.
That's what we're doing at the core.
And why does fixed maturity matter?
What does that give that a standard vault doesn't?
Yeah, so I think most of the listeners here will be extremely familiar with a regular vault or a regular DeFi opportunity. And you'll know that the yield is variable, especially in the last
couple of months, we've seen the yield has been, in general, compressing. So it can be 12% today, it can be 3% next month,
and this can make it difficult to manage your positions over time.
Being that with a PT, you know your return.
When you're putting the money in, the maturity date is set.
The yield is set.
You can model it.
You can budget around it.
It's easier for reporting.
So it has a lot of benefits that protect you from, say, that variable yield.
It's also extremely helpful if you're looping to have one side being fixed.
And this has been something which I think DeFi has really missed for a long
time, especially at size. Most yield in crypto is still variable, it's still unpredictable,
and broadly compresses at scale. So fixed yield PTs, we're aiming to change that.
Yeah, the fixed rate makes it easier to plan ahead when you go to loop your assets, which is a perfect transition to hop over to Mary to ask, what does LoopScale add to this stack? How do you support these assets?
Yeah, so you kind of hit the nail on the head.
And one of the kind of primary benefits to looping these assets or kind of doing some
of these products on loop scale is being able to fix your borrowing costs.
So like in the same way that Exponent provides predictability on the side of the trade that
involves the yield, it's a critical aspect of a, especially an RWA product and like for
institutional demand,
being able to predict the costs of that strategy.
And part of predicting the yield of that strategy and part of predicting the yield is predicting
the cost.
And so if you have a strategy that overnight you can have like a spike in rates that eats
into the entire P&L, it makes the strategy unviable to begin with.
And so the ability to support these different assets and not only fix your yield and fix
your borrowing costs, but have this, yeah, finalized kind of cost of capital as well
as return on the capital is something that's been super interesting and I think helped
this loop take off.
And I think another aspect of it is also being able to support kind of all
sorts of different ONRI-specific and ONYC-specific assets in the same vault without fragmenting
liquidity and at different borrow rates. So I think right now we currently support the ELP.
So that's the exponent LP position for the PTs and YTs, as well as the PT ONYC and then the ONYC as collateral.
And so having the segregated collateral account and per risk pricing elements of the architecture
allow us to support all these different sort of strategies that all contribute more broadly to
OnRace TVL. And walk us through what one of those looping strategies would look
like. If somebody comes in with ONYC, what can they do? Yeah, so if someone comes with ONYC,
they can, one, take the exponent route. And so that is depositing into exponent, minting PTs,
and then coming onto loop scale. And then you open up the PT-Own-YC loop, and you
deposit that, and then under the hood, something that looks a little bit like a flash loan
is happening, where you're borrowing USDC, minting, borrowing, sorry, USDC, minting more
Own-YC and minting more PT-Own-YC, depositing that into the collateral account. And so you're effectively earning yield on, say, you take a 5X levered position,
five times as much PT-ONYC than you originally deposited.
And then when you close it out, you're repaying that debt and getting back your original deposit
as well as the yield on the kind of whole 5X deposit.
And then the alternative route to that is instead of minting the PT,
just taking
your ONYC and doing a similar thing. And walk us through the incentivized borrow rate.
How do incentives work in this process? Yeah, so it's actually interesting because we definitely
have the rewards on loop scale getting distributed in a slightly different fashion than most lending protocols.
And the way it works is because we are able to kind of place orders, because the interest
rates are deterministic and not algorithmic and are configured, we can set rates at below
market rate or below the kind of clearing rate on the lend side and effectively subsidize that
borrow rate with a certain amount of rewards, which for the borrowers accomplishes the same
thing. And then we can kind of gradually over time reach more of like a kind of market sustainable
position as the borrow rate slowly starts to move up and stays below like the own YC yield.
And so you might not get like your 100% APY and you get closer to like a 20, 25% APY is how that works.
Yeah, that's great.
For the next set of questions, I'm open to any of the three speakers to pick these up.
So feel free to pop them amongst yourselves. The first is,
I would love someone to walk us through the full trade from USDC all the way into LoopScale,
if that would be possible.
I'm happy to do it. But I mean, I just kind of touched on this a little bit, but you're taking
the USCC and on Onray's platform, you can go and mint or you can go through something like Jupiter.
You can either mint ONYC directly or go into Jupiter and trade for the ONYC. And then you have the option of looping your PT ONYC. So you can either
just hold the ONYC or yield that way. You can use that ONYC to mint PT ONYC or to mint YT ONYC.
And so that's the kind of ways you can use exponent. And then kind of the final layer to
all of this is you can take any of those three assets or any of those two assets, the PT or the YT or the original
ONYC and you have the option to loop either the ONYC or the PT ONYC on loop scale.
So you're going, you're swapping, you're acquiring the ONYC, you're either minting
a PT with it or just taking your normal ONYC.
You can earn yield from either of those.
And then finally, if you want to lever up on your yield, you'd be opening a loop for one of those two on loop scale. And why does this only make sense to do on Solana?
I'm happy to take this one. I mean, for us, I mean, I go into this a lot, but just this idea of like fixed rate order book based lending protocol.
There's like a reason why every single order book based DeFi protocol had its origins on Solana.
There were attempts in different variants of it on different chains. surface area for like a user to express risk preferences and for an order book and a matching
engine to kind of run completely on chain is something that is a very only possible on Solana
product. And so if you think about this loop and the advantages of it being this fixed yield,
fixed cost product, I think a lot of what you kind of get from that is ultimately possible as a
function of what Solana's architecture
enables from like the order book and fixed cost perspective. And I don't know, Ion, if you want
to share things from like the NYC side as well. Yeah, I was going to just step in. I appreciate
where you've been taking back at the last few. So I think from our perspective, the biggest reason
why we chose Solana in terms of tokenizing the asset itself is because it's not just about making this accessible to everyone.
It's from a global perspective.
It's also doing it from a cost-effective perspective.
And Mary talked about that.
I think the infrastructure and the fees that are on the network make it a lot easier for users not only to want to hold an asset, but also utilize it across the ecosystem.
So OnYC not only takes like a historically illiquid asset class and reinsurance and
makes it mintable and something that you can hold on to, but it's also about the financial
abstraction. And so when you have partners like LoopScale, which allow you to create these
structured vault products and being able to go ahead and utilize your capital more efficiently
or being able to trade on exponent and splitting your asset into fixed and variable yield products.
I think it's a step further than just bringing RWAs on chain. It's actually making RWAs more
capital efficient and being able to actually take advantage of what the ecosystem has to offer.
and being able to actually take advantage of what the ecosystem has to offer.
And is this a template?
Could other RWA protocols replicate this idea?
Yeah, I would say that this is certainly a template.
I think that a lot of people always ask us what led to the growth.
And I think it came from a strong understanding around, one, our own yield source
and how to best position it within
the market to understanding the secondary markets and the various opportunities are available to
users. I kind of always say that the way that we built out our product roadmap was from myself and
the team being people who use DeFi and knowing where would you want to use a yield bearing asset.
So I'm sure that there's ways for other teams to be able to utilize it in terms of effectiveness.
Certain strategies might be more effective for some teams versus others.
And I think we see that currently with the expansion of the various types of yield bearing assets present on Solana today.
But I think the thing that allows us to separate ourselves is the fact that
we have truly uncorrelated cash flows. We also have brought to the industry a level of transparency
that hasn't been seen before. And I also think that we have strong liquidity management in place
to ensure that we can support all of our partners and the users on these various platforms. So
certainly a template, can it be replicated exactly? I'm not sure about that,
but I think that this is a good step for the ecosystem. Yeah, I might just add in a bit there
as well. I think that the Solana ecosystem right now is just maturing really nicely. So we really
have strong, strong teams owning the key primitives here.
So, you know, whether someone will come and, like, replicate exactly what Onry is doing is up to debate.
But, like, in general, you know, is Solana a great place for teams to bring, you know, new RWAs?
And are they really, like, great teams who own the different primitives?
And we have, you know, great credit venues.
We have, with Exponent
a great place to do yield trading. So I think Solana, the ecosystem looks like a great place
now for someone to just come in and set up shop and they can plug into many different...
The ecosystem is very well integrated and it's a great, it's a great, like now it looks compared
to a couple of years ago, it's such a great place to get started
and, you know, start building, especially in RWA business
or yield-bearing stablecoins.
Yeah, we're seeing a lot of interest and I think it's, you know,
now's a great time, especially with, you know,
the market being a bit more subdued.
It's a great time to start building and growing.
And what's next for...
Oh, sorry.
Go ahead, Mary.
Sorry, I just wanted to add something about it being a template.
And I think Henri has done a really incredible job in terms of the traits of the assets,
specifically in an RWA, and making it super compatible with DeFi in a way that a lot of like I think teams and issuers on the RWA side
haven't quite nailed yet and so I think that's something and I frequently
actually use like OMYC and Henri as an example when talking to different
issuers of like how do I make this so I can like loop it how do I make this so
it's like compatible with DeFi and I think this also like just kind of came to mind was ties back to your question around like
why Solana? I think like one of the big unlocks Henri had was even though you have like quarterly
redemptions like you do with most RWAs in it so you don't necessarily have this like real-time
like TradFi price update, they've done a really great job around
market making ensuring that there are secondary liquidity and a price that users can track.
And that's something that being able to kind of market make with that efficiency to track to some
kind of off chain or TradFi nav is something that one, I think is way more expensive to do and
potentially not even sustainable to do on a different chain.
Two, enables a lot of the DeFi integrations that exist or
makes it so they're a lot less hairy than
other variants of the different tokenized assets.
What's next for this product?
I guess that's for me, but I wonder if everyone can maybe speak on it from their side.
But for us, I think the biggest thing is making sure that we understand what the users are looking for
and how can we introduce bird opportunities
for utility across DeFi.
In the coming weeks, I know we just mentioned,
or at least Mary just mentioned the fact
that we do quarterly redemptions in the next few weeks,
we'll actually have a Q-based redemption system going live.
Some people have already seen it
that we're describing in our documentation.
So when that goes live, hopefully users will be able to,
who have completed KYB,
can go through the fact of tracking where their redemptions will wind up, being able to mint that
nav, minus some fees. And then from there, also improving secondary market liquidity. I think,
again, just a major focus for us has been how do you not only enable an RWA to be fully composable,
but actually usable.
And I think that starts with liquidity.
So we're making sure that we're going to improve our market depth, as well as ensuring that
with our right partners, we have the structures put into place to support users in any drastic
unwind situations like we saw a few weeks ago.
I think during that time period, we saw like a pretty large amount of outflows from Onry,
but we were able to handle it quite easily
and we maintain our peg on secondary.
So we're quite confident to continue to bolsa new product
to ensure security and resilience for the users.
Well, so we had that recent launch yesterday around the ELP tokens and supporting the liquidity
positions for the NYC assets.
And I think that's generally like an interesting direction in terms of kind of some BD work
we've been doing recently around different institutional participants, as well as folks
market making those LP positions, which again, tend to be kind of more active users. And so that's something that we're excited about growing on the NYC front
and then broadly kind of continuing to kind of shift our focus to these different interesting
RWA yield opportunities. Yeah, on our side, we're cooking a pretty big update in the next month or so.
This will be like a V2 for Exponent and we'll definitely be focused on supporting much deeper
liquidity in our markets.
And so naturally, we'll be partnering with OMIC on that front as well.
And we will have a few more updates with V2, which I won't go into
depth here, but the overarching goal is to just support much, much deeper institutional liquidity,
looking to get into those yield opportunities, and also just removing some of the friction for
users who want to engage in yield markets without having to like, you know, really dig
deep into how PT and YT dynamics work.
So yeah, we'll be sharing more about that in the coming weeks and looking forward to
getting it out there.
If I'm not mistaken, today users can also provide liquidity or do LP positions on Exponent
and they can utilize that on LoopScale as well, right?
Yep, that's correct.
Yeah.
Anything else that we missed covering?
I think it would just be fun. I'd love to hear even like Ion's perspective or anyone's perspective
just around like other RWA assets you are excited about?
Obviously, I know you're biased towards reinsurance and it is done excellently,
but just thinking about the space more broadly, whether those projects you're tracking
or excited about, whether that's on SVM or ETH.
Yeah, I think one of the more interesting projects that I've seen is obviously like the fact that you have such large credit funds like Apollo tokenizing their funds.
And I think that is because users there want to be able to actually utilize it more effectively.
And I'm kind of curious, actually, like what you've seen as feedback, because you're probably talking to a lot more rwa issuers than i am mary but i i'm pretty
sure that there is a reason why these funds are looking to tokenize outside of just trying to get
the same let's say black box of investors and i wonder if there's a driving factor behind yield
optimization more returns for their for the investor base um i know i want to securitize
his co-founder is a big holder on yc and
a cred so uh they he always mentions the opportunities you guys provide so curious
like what the feedback's been from like rwa issuers yeah i feel like it's a there's like a
very um just versatile group of like you have the yeah folks that are like tokenizing existing funds like Apollo,
like SecureTize, and these like yield sources that are largely managed off chain. I think
there's also this interesting segment of RW issuers that are popping up that are kind
of putting together these kind of new yield sources or bringing like these more esoteric
assets that users and most retail
doesn't have access to, whether that's like something like the USDAI or just like these
different infrastructure financing plays that are run by less of these like billion dollar
asset managers and more of these like teams working on building like it feels like more
of like a technical approach to it, a novel financial product on chain, which I find, I mean, I think it's, they both have trade-offs in terms of like
the scale and obviously like reputability of issuer does matter. But I think from like a
personal curiosity perspective, some of those more like esoteric assets, I've definitely found
pretty interesting and kind of cool to see the ability to get exposure to them,
especially if they're like well documented and transparent.
I mean, that's I think that the most exciting one so far, you know, outside of Onry,
because I can't speak on my bias, but has been Figure and what they're doing with the tokenized Helox and Prime.
I think that is something that's going to push other issuers to kind of look at and be like,
hey, they already have a very strong market that's been credit rated as one of the best assets in the traditional markets.
And now you bring in a DeFi and there's additional opportunities to do things with that.
I think having more players like that, which I think Solana has done a fantastic job at working with
the institutions, working with Wall Street, if you will, to get them comfortable with the
infrastructure, to get them to start moving on chain. I hope to see more of those types of assets.
And then there are going to be projects like Honorary, which come from that world, but grew
with a crypto native audience and intention. So it could be fun to see like what sort of assets
really succeed across the space.
Yeah, it's a big world for institutional strategies
and institutional grade DeFi.
And this fixed yield is a big component of that.
And it's great to see your three teams continuing
to innovate on the topic.
Thank you so much, Mary, Louis, and Ayanne for joining us today to chat about your new feature.
For folks in the audience, if you want to learn more,
Onry, LoopScale, and Exponent have all produced content about this new yield strategy.
You can get started on OnRI, move to Exponent,
and then go loop it on loop scale
and have a lovely rest of your day.
Thanks so much.
Thanks, everyone.
