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About Royco
Royco is a liquidity coordination market that transforms any yield source into two distinct risk tranches: a Senior tranche with downside protection and a Junior tranche that absorbs losses first in exchange for higher returns. This structure allows risk-averse users to access protected yield while risk-tolerant users earn leveraged exposure to the underlying asset.
Its core value proposition lies in non-custodial, natively composable tranching. Senior positions can serve as collateral in lending markets, and tranches can be paired on AMMs or recursively layered, enabling novel DeFi strategies. The protocol targets 90% utilization as an equilibrium point.
The problem it solves is the lack of customizable risk profiles in traditional yield farming. Users previously had to choose between unprotected high yields or low-risk stables, with no middle ground. Royco creates a market where risk is explicitly priced and allocated.
Since its mainnet launch in January 2026, Royco has accumulated roughly $19.7 million in total value locked across six markets by September 2026. The protocol has undergone extensive audits by Hexens, Certora, WatchPug, and Nethermind, plus a public Cantina competition and ongoing formal verification, with a $250,000 Immunefi bounty.
However, notable risks exist. Junior tranches currently have thin buffers—only 2-3 depositors in some markets—meaning a single large withdrawal can erode Senior protection. Withdrawals are blocked while Junior capital is backing Senior, and investments in slow-moving assets like RWAs inherit redemption delays up to 30 days. The protocol relies on third-party wrappers with weaker upgrade controls than the core system, and there is no native token yet.
Royco began as an Incentivized Action Market (IAM) deployed on Ethereum Mainnet, Arbitrum, and Base, enabling non-custodial matching between incentive providers and action providers. Its long-term shift came with Royco Dawn (launched April 2026), a risk-tranching protocol that splits yield sources into senior and junior tranches: senior earns contract-protected yield, junior provides first-loss capital for higher carry. The mainnet launch of the managed vault srRoyUSDC marked its first diversified senior-tranche portfolio. A key structural milestone was the first Observation Period triggered by the apyUSD market drawdown, stress-testing the protocol's pause-before-loss mechanism. Royco's acceptance into the Ethereum Security Subsidy Program also reinforced its security-focused positioning. These nodes trace its evolution from a general incentive marketplace into a structured credit waterfall protocol.
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Over the past six months, Royco has transformed from a liquidity coordination marketplace into a risk tranching protocol with the launch of Royco Dawn. Key milestones include the debut of the AA_FalconXUSDC market, a structured credit position originated by Pareto and backed by FalconX, offering senior and junior tranches. The protocol released v1.1.1, introducing a simplified architecture with synchronous deposit/withdrawal flows, a self-liquidation bonus system, and utilization as the sole health metric. Royco also launched its first managed vault, SR Royco USDC, curated by Dialectic, which allocates across senior tranches. The project joined the Ethereum Security Program's first cohort and hinted at an upcoming ETH vault with looping features.
Looking ahead, Royco's roadmap emphasizes expanding its vault ecosystem, including a potential junior vault for leveraged exposure without manual position selection. A key innovation under exploration is using senior tranches as collateral for lending, creating first-loss-protected leverage. The team is also focused on onboarding more real-world assets and pursuing fully on-chain credit origination, where loans are originated, deployed, and repaid entirely on-chain. With over 155,000 users and $10 million in TVL across six markets, Royco aims to bridge TradFi waterfall structures with DeFi efficiency.
Jai Bhavnani (Co-founder & CEO)
Co-founder and CEO of Royco, and founder of Waymont Co, the developer behind Royco. Previously co-founded Rari Capital, a DeFi money market protocol, and served as VP of Strategy at MyCrypto. Royco started as a liquidity coordination marketplace (an order book for liquidity) and evolved into a risk tranching protocol connecting RWA issuers with DeFi users. LinkedIn: https://www.linkedin.com/in/jaibhavnani/ | Twitter: https://x.com/jai_bhavnani