• Coverage sits near 25% for apyUSD now, above the 15% minimum. No losses booked on either side for now.

• Pareto is near target utilization, while Auto Finance has a lot of Junior capital, keeping Senior premiums low while keeping coverage.

The apyUSD market has been in its Observation Period for almost three weeks, and every metric has been visible in the app.

The Junior tranche is absorbing the drawdown, with its share price falling to 0.42. After today's Microstrategy new, it bounced back to 0.67.

Some have asked how there's still coverage. The answer is simple: 15% was only the minimum requirement, and the drawdown started with much more capital than that on the Junior. Even today, coverage remains close to 25%.

We'll keep everyone updated as it evolves.

A few markets worth watching:

• Pareto (AA_FalconXUSDC) is near the sweet spot. At 90% utilization, most capital sits in the Senior paying the premium, while the Junior only provides the coverage and liquidity required, maximizing capital efficiency.

• Auto Finance autoUSD is the opposite extreme. Utilization is very low, so coverage is enormous and the premium Senior pays is almost nothing. Senior keeps nearly all yield.

  

A drawdown is when our protection is tested.

For the past three weeks, apyUSD has shown what tranching on Royco looks like: Seniors protected, Juniors cushioned by yield, and every metric verifiable onchain. The final outcome is still ahead. We'll keep you updated.

Meanwhile, lots of interesting opportunities across markets.