Junior Tranche--$ETHy

$ETHy represents the junior tranche of the underlying asset, which is entitled to receive excess returns from the asset. When the market value of the underlying asset rises, all the excess returns after deducting the fixed interest paid to $ULSD holders will be distributed to $ETHy holders.

Conversely, when the market value of the underlying asset falls, $ETHy still needs to pay the fixed interest to $ULSD holders and bear all the losses of the underlying asset. Therefore, $ETHy essentially leverages the funds borrowed from $ULSD for investment in the underlying asset.

Compared to leveraged and contractual products, $ETHy is an asset without liquidation or margin call mechanisms, which provides better protection to holders in extreme price situations.