Forward the Original Title‘TVL年内飙升超240%，加密分级基金Tranchess进军流动性质押战局’

From an experimental financial innovation to a cornerstone of the liquidity market, DeFi has undergone rapid growth and evolution over the years. As the deleveraging cycles amplify market dynamics, the DeFi ecosystem has faced liquidity crises that have reshuffled the competitive landscape, turning it into a fierce battleground.

Tranchess, a seasoned participant in the DeFi space, is known for its focus on tranche-based fund structures. Over the past few years, the platform has continuously honed its cross-cycle performance in asset management and has now plunged into the rising narrative of liquid staking.

Tranche-Based Fund Model: Catering to Different Risk Profiles, With Over $250 Million in TVL

Tranchess operates as a tranche-structured fund within the DeFi world, offering tailored investment strategies for varying risk appetites. It addresses common issues such as impermanent loss, low capital efficiency, and forced liquidations. This method of segmenting risk levels and expected returns has drawn substantial attention, evidenced by the platform’s TVL (Total Value Locked) surging during key market phases, which reflects its strong product-market fit.

A tranche fund is a type of financial derivative tool that segments a fund product and its associated risks into different levels. Typically, Class A tranche funds focus on generating fixed returns, while Class B tranche funds aim to capture residual profits. Tranchess has derived multiple risk/return matrices from a single master fund. The Queen fund serves as the main fund, primarily composed of BTCB, ETH (with a 1% annual management fee), or BNB (with a 2% annual management fee), and can offer long-term holders additional returns ranging from 2% to 16%.

The Queen fund can be split into two sub-funds, Bishop and Rook, each offering different risk-return profiles. For each Queen token, holders receive 0.5 Bishop tokens and 0.5 Rook tokens. Bishop is designed as a stable, high-yield product within the DeFi ecosystem, lending liquidity assets to Rook holders, making it ideal for users seeking stable returns. On the other hand, Rook is a leveraged fund aimed at more aggressive investors and can be understood as a form of uncollateralized yield farming without the risk of forced liquidation.

At the end of 2023, Tranchess launched its qETH liquid staking product on Ethereum. Building on this foundation, the platform combined its existing tranche fund structure to develop the Turbo & Stable product suite.

In Tranchess’ Turbo & Stable funds, Turbo represents an enhanced version of ROOK, allowing users to earn rewards through leverage, while Stable serves as an upgraded version of BISHOP, enabling users to earn a fixed interest rate. According to the official website, Tranchess has already launched its Turbo & Stable funds on Ethereum, BNB Chain, and the Scroll network, attracting over $250 million in total value locked (TVL). These products can be converted back to their respective underlying tokens after the activity period ends, and there are no lock-up periods, creation/redemption fees, or splitting fees.

Taking the STONE fund launched on Scroll as an example, this fund has attracted over $190 million in participation. It is a six-month collaboration between Tranchess and StakeStone, featuring products such as stoneQUEEN, turPSTONE, staYSTONE, and the staYSTONE-STONE LP.

Users can create stoneQUEEN from STONE at a 1:1 ratio to earn 1x reward points. Alternatively, each stoneQUEEN can be further split into 0.1 turPSTONE and 0.9 staYSTONE to earn 2x reward points.

turPSTONE, equivalent to the Turbo token, comes with a built-in 10x leverage and offers a 2x reward points boost from StakeStone, allowing holders to earn 20x StakeStone points. (Note: After the fund matures, token holders can redeem the underlying assets, including STONE, proportionally based on the net value at maturity. Before maturity, users can swap Turbo or Stable tokens back into STONE at the market price displayed on the website. The redemption ratio for QUEEN remains 1:1. The same applies to other products.)

staYSTONE, the fixed-income Stable token, offers holders a fixed annual interest rate of 6%. At the end of the fund term, staYSTONE holders can redeem approximately 1.0149 STONE per token, but they do not earn any reward points.

The staYSTONE-STONE LP holders benefit from a diversified basket of rewards, including CHESS incentives, a 0.05% transaction fee rate, interest, and 2x reward points. Liquidity can be added or removed at any time with either a single or dual token option.

Taking the weETH fund launched in collaboration between Tranchess and ether.fi as another example, this fund includes products such as weethQUEEN, turPWEETH, staYWEETH, and staYWEETH-weETH LP. The event will conclude on December 15th this year. Users can exchange weETH for weethQUEEN at a 1:1 ratio, and each weethQUEEN can be split into 0.1 turPWEETH and 0.9 staYWEETH. Similarly, each turPWEETH and 9 staYWEETH can be combined to form 10 weethQUEEN, maintaining the 1=0.1+0.9 ratio. weethQUEEN holders can earn 4x reward points.

Holders of turPWEETH can earn 40x points due to the 10x fixed leverage and a 4x reward multiplier from ether.fi. (Upon maturity, the net value is expected to allow redemption of approximately 0.9426 weETH per token.) On the other hand, staYWEETH offers a fixed 10% interest rate, and upon maturity, it is expected to be redeemable for approximately 1.006 weETH.

Holders of staYWEETH-weETH LP receive rewards such as CHESS tokens, a 0.05% transaction fee, interest, and a 4x points multiplier.

Additionally, Tranchess has deepened its collaboration with the Scroll ecosystem, allowing Turbo & Stable products launched on Scroll to participate in Scroll’s own Session rewards, earning Scroll Marks points.

Furthermore, the Turbo & Stable funds include products such as SolvBTC, slisBNB, and Staked ETH, with product logic similar to those mentioned earlier.

Notably, Tranchess charges a 3% fee on the reward points earned through Turbo & Stable funds. On BNB Chain, this 3% is covered by the project team without affecting users’ reward points. On Scroll, the fee is deducted based on users’ Turbo point earnings. All reward points are 100% fully returned to veCHESS holders on each chain in alignment with the project’s maturity and TGE (Token Generation Event) schedule, further enhancing the yield for veCHESS holders.

From BNB to Ethereum, Tranchess Deepens Its Push Into the Liquid Staking Arena

As a key branch of the DeFi ecosystem, liquid staking has emerged as a crucial pillar, supporting a significant portion of DeFi’s TVL (Total Value Locked), which now exceeds tens of billions. Since Ethereum’s Shanghai upgrade, liquid staking has rapidly become a hot narrative in the DeFi space, with capital inflows clearly indicating this market trend. According to DeFiLlama, as of August 24, liquid staking accounted for more than $45 billion, making up nearly half of the DeFi market. Furthermore, given the current staking rates across major PoS (Proof of Stake) chains, the liquid staking sector still has ample room for growth.

In fact, after years of iteration and upgrades, Tranchess has already entered the staking space. As early as the beginning of 2022, Tranchess dipped its toes into staking yield opportunities by launching the BNB Fund and becoming a BSC validator node to generate new revenue. In December of the same year, alongside its launch on Ethereum, Tranchess introduced its liquid staking product qETH. This year, with the release of its V3, Tranchess officially made its mark in the LSDFi (Liquid Staking DeFi) sector.

Beyond partnering with several well-known LSD (Liquid Staking Derivatives) protocols to launch multiple products, Tranchess also supports liquid staking for the QUEEN tokens on Ethereum and BNB Chain. Users who choose to stake ETH in exchange for qETH can earn an APR of 4.4%, with the current total staked amount exceeding $550,000. In addition to staking rewards, users can provide liquidity in the qETH/ETH pool on Balancer, earning both CHESS rewards and veBAL incentives, and these rewards can be further utilized in other DeFi protocols. It should be noted that Tranchess charges a 10% fee on staking rewards, which is distributed among node operators, the Tranchess treasury, and weekly rebates to veCHESS holders.

In addition to enhancing single-asset yield mining, the BNB Fund introduces an extra layer of Alpha yield. Specifically, the BNB Fund stakes BNB on the Tranchess validator node within the BNB Chain, offering an APR between 8% and 16%. This reward is distributed to all nQUEEN+ and nROOK+ holders after protocol fees, with additional CHESS rewards available when staking Q/B/R tokens. For example, users staking BNB to create nQUEEN can earn a 0.45% PoS staking reward along with 3.7% to 11.7% CHESS rewards.

“With growing demand for Ethereum, we expect that liquid staking products like qETH and STONE, along with related products such as staYSTONE and turPSTONE, will continue to attract attention. The introduction of Ethereum spot ETFs will likely boost institutional interest in Ethereum and staking, driving up the value of Ethereum and increasing network demand, ultimately leading to higher staking yields,” Tranchess mentioned in a recent post.

As the BTCFi concept continues to mature, it will be interesting to watch how Tranchess, which was one of the first to introduce WBTC asset management on the BNB Chain, leverages its current partnerships with projects like SolvBTC to further explore opportunities in the BTCFi space.

TVL Soars Over 240% This Year, Backed by Binance Labs and Others

Tranchess’ impressive growth numbers demonstrate its strong competitive edge. According to DeFiLlama, as of August 24, Tranchess’ TVL has surpassed $210 million, ranking second on Scroll with a staggering 241.9% growth this year.

As a DeFi protocol born during the boom period of decentralized finance, Tranchess announced the completion of a $1.5 million seed funding round as early as 2021. Several notable institutions, including Three Arrows Capital, The Spartan Group, Binance Labs, Longhash Ventures, and IMO Ventures, participated in this round.

Beyond product strategy, the team has been a crucial factor in the success backed by prominent capital. Tranchess co-founder Danny Chong has over 16 years of experience in the banking industry, previously heading the FX and fixed income product sales for SEA at Crédit Agricole. Other team members have extensive professional backgrounds, with experience at companies such as Microsoft, Google, Morgan Stanley, and UBS.

Tokenomics is another vital component of the Tranchess ecosystem. The governance token CHESS has a total supply of 300 million, with 50% allocated for community distribution and incentives. Token holders can participate in community decisions, vote, and use CHESS to pay transaction fees. Besides purchasing on the secondary market, users can earn CHESS by staking QUEEN, BISHOP, or ROOK tokens (weighted at a 3:4:2 ratio) or by providing liquidity to AMM pools. veCHESS represents locked CHESS tokens, with locking periods ranging from one week to four years. The conversion rate increases linearly—locking 1 CHESS for one year grants 0.25 veCHESS, while locking it for four years yields 4 veCHESS. veCHESS holders benefit from several privileges, including voting on the distribution of Alpha yields between BISHOP and ROOK, voting on weekly CHESS emissions, receiving 50% of weekly protocol revenue, enhanced staking efficiency, and sharing 3% of the Turbo & Stable fund point earnings, as mentioned earlier.

Last Thursday, Tranchess introduced a new community governance proposal, enabling veCHESS holders to vote on future collaborations for Turbo & Stable products. This move not only expands the application scenarios for veCHESS but also highlights the immense potential for rapidly replicating the Turbo & Stable model.

Moreover, in the challenging environment of the DeFi “dark forest,” Tranchess has made substantial efforts to enhance security. These include completed smart contract audits by PeckShield and Certik, the launch of a bug bounty program with Immunefi, and partnerships with DeFi insurance protocol InsurAce. According to its roadmap, Tranchess plans to continue expanding its offerings in 2024, including more structured products, support for node operators, and cross-chain (X-Chain) expansions.

Overall, as a veteran crypto-structured fund, Tranchess provides diverse risk strategies for its users while improving asset allocation flexibility and efficiency. With the continued surge in liquid staking, the rising momentum of the LSD sector is set to give Tranchess a strong competitive edge in the DeFi market.

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