Casten Protocol
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Junior and Senior Tranches
Borrower Pools have both a junior and senior tranche. Junior tranche holders supply capital to the junior pool, and the Senior tranche holders supplies capital to the senior pool. When a borrower makes repayments, the Borrower Pool applies the amount first toward any interest and principal owed to the senior tranche at that time, and then toward any interest and principal owed to the junior tranche at that time.
To track the different amounts that different participants supply, both the Backers and the Senior Pool receive an NFT when they supply capital. The NFT tracks the amount that was supplied and how much of it has been redeemed.
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