On-Chain Structured Product

An on-chain structured product is a packaged investment strategy that runs through smart contracts and gives depositors a defined payoff profile, much as bank-issued structured products do in traditional finance. Common designs include vaults that automatically sell covered call or put options on deposited tokens each week to earn premiums, products that split a yield-bearing token into separate principal and yield parts, and notes that combine a stable return with exposure to price moves. Deposits are usually represented by a receipt token that tracks the depositor's share. These products can make complex strategies accessible, but returns are not guaranteed: an option-selling vault can lose money in a sharp market move, and users also carry smart contract, oracle and liquidity risk. Where they resemble securities, they may fall under financial regulation. Also see decentralized derivatives.