Tranchess Finance is an interesting project that I came across this week. The name of the protocol is not a typo but is a chess themed tokenised asset management and derivatives trading protocol. Tranchess is on BSC and is primarily meant for holders of BTCb (Binance pegged BTC) who are long on BTC. Since native BTC does not have any yield generation or passive income capabilities, wrapping bitcoin has helped the whole community enjoy the benefits of decentralised finance.
How Does Tranchess Finance Work?
Tranchess has 3 main products / tranches:
1. TOKEN QUEEN BTC - You can swap your BTCb for QUEEN (always redeemable 1:1) and enjoy the price volatility of BTC just like regularly holding BTC. In addition, QUEEN holders are also entitled to 33% of the total emissions of the chess token. Chess is the governance token and staking CHESS also earns protocol revenue. This incentivises BTCb holders to swap for QUEEN BTC for extra returns. Alternatively users can also acquire queen by swapping their USDC.
2. TOKEN BISHOP BTC - BISHOP BTC is a sub-tranche of tranchess and provides holders with a weekly fixed interest payout. The rate of interest always = Average interest rate in Venus Protocol for BTC + (Premium decided by CHESS holders). Since BISHOP holders are heavily dependent of the premium and they facilitate the functioning of another sub-tranche (ROOK). 44% of the total CHESS token emissions are distributed to BISHOP holders.
3. TOKEN ROOK BTC - ROOK BTC is yet another sub-tranche in which ROOK holders leverage their positions by borrowing from the BISHOP tranche and then supplying funds to the main QUEEN tranche. Their profit will be = profit from queen tranche (+% in BTC + CHESS emissions) + (22% CHESS emissions for ROOK holders) - (interest payable to BISHOP for borrowing). Loss will be calculated the same way if BTC goes down.
Figure 01 below briefly describes the entire process
You can find out how to trade tokens by watching the video guide below:
Splitting and Merging of TOKENS:
A user must first go the split and merge tab and enter the amount of Token Queen they would like to split. Tranchess will give them an estimate of the amount of Token Bishop and Rook you'd receive. In order to merge, a user will need both BISHOP and ROOK tokens and it works exactly like the split option.
This protocol has a product for all types of users and is worth trying out:
Investors: Queen - Those who want to hold BTC for the long run - BTC volatility gains + additional CHESS rewards
TradFi Newbs / Risk Intolerant: BISHOP - Use USDC to get BISHOP and enjoy fixed interst + bonus interest + CHESS rewards
Traders / Speculators: ROOK - Enjoy the volatility of BTC without owning in a capital efficient manner through leverage + CHESS rewards