From sUSD1+ to Institutional-Grade Asset Management Gateway: How Lorenzo Defines the New On-Chain Investment Banking Paradigm

Article by: ChandlerZ

USD1 Ecosystem Rises as Stablecoin Yield Demand Continues to Grow

In early 2026, the USD1 stablecoin, pegged to the US dollar and launched by “World Liberty Finance” (WLFI), experienced rapid development, with circulation surpassing $5.4 billion, establishing itself among mainstream stablecoins. Unlike traditional stablecoins, USD1 carries clear political and policy attributes: with former US President Trump as the current US President, his family’s direct involvement with WLFI has led the market to perceive potential advantages in policy environment, regulatory communication, and resource coordination, all based on compliance.

For a long time, the stablecoin market has been dominated by USDT and USDC. However, as regulatory environments evolve, institutional capital enters, and DeFi alongside traditional finance demands develop, the market is reassessing the potential of new-generation stablecoins. USD1 continues to attract institutional attention. Meanwhile, single-payment functions are no longer sufficient to meet capital needs; demand for stablecoin-based financial products is rising. Coupled with trends like RWA tokenization and quantitative strategies, this has driven market expectations for more structured and sustainable on-chain yield products.

Against this backdrop, Lorenzo, as WLFI’s official partner financial platform, launched the On-chain Traded Fund (OTF) product model in 2025. Its initial product, sUSD1+ OTF, integrated USD1 into a yield-oriented asset structure, becoming one of the earliest use cases of yield generation within the USD1 ecosystem.

After market validation of sUSD1+ OTF, Lorenzo accelerated product expansion in 2026: launching BNB+ OTF to extend the OTF model to more asset types; introducing the new Lorenzo Earn product line to offer diverse DeFi yield options for users with different risk preferences; and implementing a new Proof of Commitment (PoC) incentive system to further bind long-term participation, asset holding, and ecosystem incentives.

From OTF to Earn: How Lorenzo Builds an On-Chain Asset Management System

Lorenzo’s core team comes from Wall Street investment banks and top Web3 startups, with investors including YZi Labs, Gumi Cryptos, Portal Ventures, Animoca Brands, and others. Leveraging long-term experience in financial product design and on-chain infrastructure, Lorenzo proposed the OTF (On-chain Traded Fund) asset issuance model.

OTF is similar to traditional ETFs: through standardized share tokens, it encapsulates underlying assets or yield strategies into tradable, transferable financial assets. The key difference is that all creation, issuance, settlement, and clearing are completed on-chain. Its share tokens are inherently traceable, verifiable, and composable, allowing direct integration with DeFi protocols. To support scalability, Lorenzo also built a foundational financial abstraction layer (FAL), providing a unified tokenization and issuance framework for various yield strategies.

sUSD1+ OTF is Lorenzo’s first OTF product, operating on BNB Chain, with USD1 as the unified settlement asset. Its core yield source is a neutral quantitative trading strategy, with plans to gradually expand to tokenized US Treasuries (RWA) and other on-chain yield scenarios. The yield pathways are transparent, and fund flows can be verified on-chain.

During the extreme market conditions of October 2025, when large-scale liquidations and multiple protocol yields were under pressure, sUSD1+ OTF still achieved approximately 1.1% daily positive returns, with a 7-day APY approaching 50%. This demonstrated the product’s resilience and provided empirical validation of its risk management capabilities.

In terms of product design, for example, users can subscribe to sUSD1+ using USDC, USDT, or USD1, receiving sUSD1+ tokens representing OTF shares. These tokens are non-inflationary with a net asset value (NAV) that increases as underlying yields accrue. Redeeming involves exchanging the tokens at real-time NAV for USD1. This design lowers operational barriers for participating in complex strategies, allowing users to engage in institutional-grade yield paths without frequent rebalancing or manual claim processes.

Additionally, sUSD1+ possesses native DeFi liquidity and composability. The tokens can serve as holdings, collateral, or be used in lending and borrowing protocols, or integrated into more complex trading and capital management strategies. This enhances overall capital efficiency and expands the use cases for holders across multiple chains.

From Strategic Assets to Yield Enhancement: Lorenzo Earn

Lorenzo Earn is Lorenzo’s DeFi Vaults product line, designed to simplify user participation in diverse on-chain yield scenarios. By packaging mature DeFi strategies into standardized vault products, Lorenzo Earn offers an integrated “deposit—strategy execution—redeem” yield experience. Users can participate in yield generation without frequent management or understanding complex mechanisms.

Different vaults in Lorenzo Earn are designed around various assets and strategies, covering market making, lending, yield aggregation, and more. The system handles strategy execution, position management, and related operations, while users only need to deposit and withdraw assets to participate in corresponding yield paths.

The first product in Lorenzo Earn, PancakeLP Vault, deploys sUSD1+ and USD1 into PancakeSwap V3 liquidity pools, managed centrally by the system. Users do not need to set price ranges or perform frequent operations; they can participate in V3 market making, earn trading fees, and accumulate Lorenzo points.

From OTF to Earn, Lorenzo is gradually building a layered on-chain asset management system: OTF encapsulates yield strategies into tradable, composable on-chain assets for secondary market circulation; Lorenzo Earn offers a lower-threshold yield participation method through vaults that execute specific strategies. The tokens users hold represent their share in the strategy but are not meant for secondary trading. Together, they form Lorenzo’s comprehensive yield management framework.

From Stablecoins to Mainstream Public Chain Assets: BNB+ OTF

Notably, Lorenzo has accelerated the launch of its second OTF product, BNB+. This marks a further expansion from stablecoin yields to mainstream public chain assets. BNB+ OTF tokenizes institutional-grade BNB strategies (including Hash Global’s BNBA fund), creating a quadruple yield engine that allows ordinary users to access yield paths previously only available to institutions with a single click. This product also demonstrates the replicability and scalability of the OTF model across different asset classes.

Community Incentive System for Value Co-Creation

As the product matrix continues to grow, Lorenzo is also upgrading its community incentive system by introducing the PoC (Proof of Commitment) mechanism. PoC is a framework designed around real product participation behaviors, used to measure user engagement across sUSD1+ OTF, BNB+ OTF, and Lorenzo Earn Vaults.

Currently, user participation, holding duration, and strategy engagement within the PoC system are converted into Lorenzo Season 2 points. PoC also includes veBANK (locked $BANK rights) and additional incentives for early participants via yLRZ. These mechanisms collectively serve as PoC, rewarding users who actively contribute to product operation, provide liquidity, and support system stability.

From Products to Platform: Lorenzo’s On-Chain Investment Banking Vision

Viewing sUSD1+ OTF merely as a yield product underestimates its strategic significance for Lorenzo. The broader goal is not just a single fund but to build an on-chain investment bank. In this framework, RWAs, quantitative strategies, and compliant funds can all be tokenized via OTF, enabling issuance, subscription, trading, and settlement directly on-chain.

This positioning aims to fill a gap in the DeFi market. Historically, on-chain asset management products targeted retail users, often fragmented and lacking standardization and composability. Lorenzo seeks to modularize and standardize this process, lowering barriers for both institutions and individuals to access diversified yields. Meanwhile, OTF share tokens can be integrated into other DeFi protocols for trading, collateralization, and lending, improving capital turnover efficiency on-chain.

However, whether the market will continue to adopt sUSD1+ as collateral and trading assets remains to be seen, depending on protocol integrations. The yield performance of the OTF model across different market cycles needs time to validate. As a nascent stablecoin, USD1’s ability to establish sufficient trust and liquidity also requires ongoing observation.

Overall, sUSD1+ OTF is a noteworthy experiment. It offers an alternative to common DeFi liquidity pools in the stablecoin yield space and targets institutional standards from the outset. With the launch of sUSD1+ OTF, Lorenzo is simultaneously advancing BNB+ OTF, Lorenzo Earn, and PoC incentive mechanisms, gradually refining the synergy between asset issuance, yield strategy execution, and user incentives. These modules collectively form Lorenzo’s on-chain asset management framework, paving the way toward multi-asset, multi-strategy systematic deployment.