Reflect Tranches

Summary

Ketju does not approve Reflect Tranches: the junior token is a first-loss position that holders cannot redeem at once, and the senior token is covered only by a thin junior tranche made of the same asset it protects. Reflect Tranches splits a yield-bearing Solana token into a senior and a junior token. Junior takes the first loss and receives part of senior’s interest in return. DefiLlama’s yield feed listed six pools on 2026-10-16 with about $2.2 million: a senior and a junior over each of syrupUSDC (Maple), PRIME (Hastra), and eHYUSD (Hylo). The junior tranche is between a fifth and a quarter of the senior tranche’s size. Ketju approves none of the three underlying assets. Reflect’s docs list audits of the tranche program but publish no reports. Ketju will review the protocol again if any of the review triggers below occurs.

Review triggers
• Reflect publishes the audit reports for the tranche program with no unresolved high-severity finding
• Each underlying asset of a market passes a separate Ketju review and is approved
• The junior tranche holds more than 40% of senior capital in a market for 30 days

Ketju checks this memo every night and opens a review if its venues or files show a warning or a cited document changes. The first confirmation is due 2027-01-16.

Research

How it works

Each market takes one yield-bearing token and issues two claims on the same pool. Senior passes a set share of its interest to junior. In return, junior absorbs the first losses before senior does. Junior collects that share on top of its own yield and absorbs every loss until its capital is gone. Reflect’s own example has $10 million senior and $2 million junior in a 5% strategy, with senior passing 20% of its interest: senior earns 4% and junior 10%. A 10% fall in the pool costs junior 60% of its capital and senior nothing. A 20% fall costs junior everything and senior 4%. Reflect’s on-chain program enforces the order of loss; no person signs a contract to guarantee it. The adapter that DefiLlama uses reads the junior multiple from the senior-to-junior ratio, and shows 1.93x to 2.22x on the three junior pools.

Size and holdings

On 2026-10-16 the feed showed junior at about 19.5% of senior over syrupUSDC ($260,000 against $1.33 million), 20.4% over PRIME ($51,000 against $250,000), and 27.0% over eHYUSD ($65,000 against $240,000). Reflect’s docs say a ratio of 20% protects senior against a fall of about 17%. The figure is below 20% because junior holds the same asset and is marked down with it. Junior holders can also withdraw, and the docs say coverage falls when they do. Senior is protected only by the capital that junior holders choose to leave in. A larger loss in the underlying reaches senior directly. So does a sudden loss, such as a default or a depeg.

Underlying assets

The docs say underlying risk passes straight through, including smart contract, venue, liquidity, and collateral risk. Ketju does not approve Maple’s syrupUSDC because of operator concentration, off-chain collateral custody, and a withdrawal queue of up to 30 days. Hastra’s PRIME adds Figure home-equity credit to a Treasury-backed wrapper, and Ketju does not approve it under the class rule for off-chain credit sold as a stablecoin. eHYUSD is a claim on Hylo’s hyUSD stablecoin, whose reserve is held in staked SOL. Hylo is small enough that Ketju has not opened a review of it. A senior token over any of these pays a lower rate and keeps the same default and depeg risk, with only a thin junior tranche in front of it.

Who controls it

Reflect says deposits sit in on-chain programs and nobody at Reflect can withdraw them or block a redemption. We found no statement of who can upgrade the tranche programs, and we did not read the on-chain upgrade authority. The audits page lists Offside Labs and Adevar Labs against the Tranches program with no link. It says reports for reviews without a link are awaiting publication. The audit repository, listed on 2026-10-16, holds six files: three Offside reports (Delta Neutral, September 2025; Proxy, November 2025; Core Yield Routing, February 2026) and three on the RLP pool and oracle stacking. None is named for tranches. Reflect marks the tranche API pages as available on the development API only.

Losses and incidents

We found no incident, loss event, or pause in the sources we read. The product is new: DefiLlama dates the listing to September 2026.

Fees and incentives

Most of the rate comes from incentives. Senior syrupUSDC shows 15.4%, of which 4.1 points are base yield and 11.3 are rewards. PRIME senior shows 35.1%, of which 29.7 points are rewards, and PRIME junior shows 64.5%, of which 48.5 points are rewards. eHYUSD senior shows 15.4% with 8.9 points of base. The app also advertises 3.0x Reflect Points on syrupUSDC deposits. Rewards end when the sponsor stops paying. A client who bought for the advertised rate would then keep the junior-tranche and underlying risk and earn only the base rate.

Withdrawals

A senior holder can redeem at any time for the underlying token. A junior holder must file a request, wait for a period set by each market, and then complete a second step. The docs say this stops junior holders withdrawing ahead of a loss. Both tranches redeem for the underlying token, and each underlying token converts to dollars on its own terms: Maple’s queue for syrupUSDC, Figure’s redemption terms for PRIME, Hylo’s mint and burn for eHYUSD. Pools of $50,000 to $1.3 million cannot absorb a large redemption, and Reflect sets deposit caps by market.

Comparison

A holder of the underlying asset gets the same exposure at the full rate, with no program between the holder and the asset. Ketju does not approve the underlying assets either. A senior token gives up part of the rate for a thin layer of protection. A junior token is a first-loss position with about twice the underlying rate and four to six times the loss. An advisor cannot explain it to a client in two sentences, and a holder cannot sell it quickly. Ketju will review the protocol again if Reflect publishes clean reports for the tranche program, if Ketju approves the underlying assets, or if the junior share rises well above a fifth of senior and stays there.

Sources

Each claim above comes from one of these sources. Where Ketju could not verify a number, the memo states that.

• Reflect Tranches app · primary · accessed 2026-10-16
  Supports: markets syrupUSDC, PRIME, eHYUSD, Reflect Points 3.0x, incentive-boosted rates
• Reflect docs: Protect · primary · accessed 2026-10-16
  Supports: senior and junior mechanics, worked example, coverage ratio, junior cooldown, underlying risk passes through
• Reflect docs: Risk · primary · accessed 2026-10-16
  Supports: Protect risk, junior cannot exit during cooldown, no insurance fund, liquidity risk
• Reflect docs: Audits · primary · accessed 2026-10-16
  Supports: Tranches reviewed by Offside Labs and Adevar Labs, reports awaiting publication, audit scope limits
• Reflect docs: FAQ · primary · accessed 2026-10-16
  Supports: non-custodial claim, senior redeems at any time, junior cooldown, no deposit insurance
• Reflect docs: Compliance · primary · accessed 2026-10-16
  Supports: non-custodial design, Protect junior positions
• Reflect audits repository: file listing · primary · accessed 2026-10-16
  Supports: six files listed, three Offside Labs reports, no tranche report named
• DefiLlama yield adapter: Reflect Tranches · secondary · accessed 2026-10-16
  Supports: junior leverage formula, base and incentive split, market list
• DefiLlama: Reflect Tranches protocol listing · secondary · accessed 2026-10-16
  Supports: listing date, Solana only, audit repository link
• DefiLlama: yield pools feed · secondary · accessed 2026-10-16
  Supports: six pools, pool TVL, base and reward rates, junior multiples

The asset and the chain

This memo covers the protocol. A position also holds an asset and settles on a chain. Whichever of the three holds the most power over the position decides who can freeze it. These tables describe control and do not judge quality.