Isolated Lending Markets are a natural way to tranche the risk of a tokenized strategy. Lenders : protected against drawdowns (via liquidations) and provided a limited pool of free liquidity (via unutilized lending supply) in exchange for lower yields. Vanilla holders : moderate risk, moderate yield Loopers : take on considerable drawdown and liquidity risk in exchange for the highest returns. I suspect the popularity of the looper-lender market is partly responsible for why explicit risk tranching hasn't taken off onchain (relative to its popularity in TradFi). Basically the demand for splitting a tokenized strategy into different R&Rs is already met in a personalizable fashion w/o additional fragmentation i.e., loopers can choose their own LTVs to Liquidation Threshold buffers while drawing from the same liquidity pools. As preferences expand (which they will), this could change, but for now it gets the job done.