TVL has surged over 240% this year, as the crypto tiered fund Tranchess enters the liquidity staking battle
Tranchess, a veteran player in the DeFi space, has been enhancing its ability to navigate through cycles around asset management over the past few years, while also engaging in the narrative wave of liquid staking.Author: Nancy, PANews
From financial innovation experiments to the cornerstone of liquidity markets, DeFi has undergone rapid development and evolution through years of ups and downs. With the de-leveraging amplifying the cyclical effects, the DeFi ecosystem has faced a liquidity crisis, causing the gears of various players' fates to turn, leading to fierce competition.
Tranchess, a veteran player in the DeFi space that has mastered the concept of tiered funds, has continuously enhanced its ability to navigate through cycles over the past few years, diving into the narrative wave of liquid staking.
Tiered Fund Model Matches Different Risk Preferences, Attracting Over $250 Million
Tranchess is a tiered structure fund in the DeFi world, primarily catering to investment needs with different risk preferences and addressing issues such as impermanent loss, inefficient capital usage, and forced liquidation. This method of breaking down risk levels and expected returns has garnered significant market attention for Tranchess, as evidenced by the soaring TVL metrics at that time, confirming the product's market fit.
A tiered fund is a financial derivative tool characterized by dividing fund products and risks into different levels. Generally, Class A sub-funds primarily obtain fixed returns, while Class B sub-funds mainly acquire residual returns. Tranchess has derived multiple risk/return matrices from a single main fund, where Queen is the mother fund, primarily creating funds for BTCB, ETH (1% annual management fee), or BNB (2% annual management fee), providing long-term holders with additional returns of 2% to 16%; Bishop and Rook are two different risk-return sub-fund products split from QUEEN, where each QUEEN can obtain 0.5 BISHOP and 0.5 ROOK. Bishop is a high-yield stablecoin product in the DeFi context, lending liquidity assets to Rook holders, specifically designed for stable income users; Rook is a leveraged fund designed for aggressive investors, akin to uncollateralized lending mining, with no forced liquidation risk.
By the end of 2023, Tranchess launched its qETH liquid staking product on Ethereum, subsequently building on this foundation to develop the Turbo & Stable product segment, combining its tiered fund structure.
In the Turbo & Stable fund under Tranchess, Turbo represents an enhanced version of ROOK, allowing users to earn points rewards through leverage; Stable is an enhanced version of BISHOP, which can earn a fixed interest rate. According to the official website, Tranchess's Turbo & Stable fund has launched related funds on Ethereum, BNB Chain, and Scroll networks, attracting over $250 million. These products can all be converted back to their respective underlying tokens after the activity ends, with no lock-up period, creation/redemption fees, or splitting fees.
Taking the STONE fund product launched on Scroll as an example, the STONE fund has attracted over $190 million in participation. This is a six-month fund launched in collaboration between Tranchess and StakeStone, primarily including stoneQUEEN, turPSTONE, staYSTONE, and staYSTONE-STONE LP. Users can create stoneQUEEN at a 1:1 ratio with STONE to earn 1x points, or further split each stoneQUEEN into 0.1 turPSTONE and 0.9 staYSTONE to earn 2x points. Here, turPSTONE is equivalent to a Turbo token, with a 10x inherent leverage rate and an additional 2x points bonus from StakeStone, allowing holders to earn 20x StakeStone points (Note: After the fund matures, token holders can exchange back to the underlying assets (including STONE) based on the net value at maturity, so this number is the approximate net value at maturity. Before this, users can swap Turbo or Stable back to STONE, and this process will be exchanged at the current market trading price displayed on the webpage. The exchange ratio for QUEEN remains 1:1, and the same applies here); staYSTONE is a Stable token with fixed returns, allowing holders to earn a fixed annual interest of 6% (after the fund matures, it can be exchanged back to approximately 1.0149 STONE based on its net value), without earning any points. Meanwhile, staYSTONE-STONE LP holders can earn a basket of returns, including CHESS rewards, a 0.05% fee rate, interest, and points (2x), and holders can add or remove liquidity at any time with either single or dual tokens.
Another example is the weETH fund launched in collaboration with ether.fi, which includes weethQUEEN, turPWEETH, staYWEETH, and staYWEETH-weETH LP, with the activity ending on December 15 this year. Users can exchange weETH for weethQUEEN at a 1:1 ratio and split each weethQUEEN into 0.1 turPWEETH and 0.9 staYWEETH. Similarly, each turPWEETH and 9 staYWEETH can be combined into 10 weethQUEEN, maintaining the ratio of 1=0.1+0.9, with weethQUEEN earning 4x points. Additionally, turPWEETH holders can earn a fixed leverage rate of 10x and a 4x points multiplier from ether.fi, resulting in 40x points (after the fund matures, it can be exchanged back to approximately 0.9426 weETH based on its net value), while staYWEETH can earn a fixed interest of 10% (after the fund matures, it can be exchanged back to approximately 1.006 weETH based on its net value). staYWEETH-weETH LP holders can earn CHESS rewards, a 0.05% fee rate, interest, and points (4x) as rewards.
At the same time, Tranchess has also partnered deeply with the Scroll ecosystem, allowing the Turbo & Stable products launched on Scroll to participate in Scroll's own Session rewards, earning Scroll Marks points.
In addition, the Turbo & Stable fund also includes SolvBTC, slisBNB, and Staked ETH funds, with product logic consistent with the aforementioned products.
It is worth mentioning that Tranchess will charge a 3% fee based on the points earned from the Turbo & Stable fund, where on the BNB Chain, this 3% is additionally calculated and paid by the project party, not affecting user point earnings; on Scroll, it is charged based on user Turbo point earnings. All point earnings will be 100% fully returned to the corresponding veCHESS users on the respective chains in sync with each project's maturity and TGE, further enhancing the yield for veCHESS holders.
From BNB to Ethereum, Tranchess Deepens Its Efforts in Liquid Staking
As an important branch of the DeFi ecosystem, liquid staking has supported half of the DeFi's multi-billion TVL. Since the Ethereum Shanghai upgrade, liquid staking has become a hot narrative in the DeFi space, with capital flows directly indicating this market's trend. According to DeFiLlama data, as of August 24, the liquid staking sector occupies over $45 billion, accounting for a significant portion of the DeFi market. Moreover, from the staking rates of various mainstream POS chains, the liquid staking sector still has considerable growth potential.
In fact, after years of iteration and upgrades, Tranchess has entered the staking sector. As early as the beginning of 2022, Tranchess had already ventured into the staking yield sector, launching the BNB Fund and becoming a BSC validator node to gain new income; in December of the same year, Tranchess launched the liquid staking product qETH on Ethereum; this year, Tranchess officially fired the first shot in the LSDFi sector with the release of V3.
In addition to collaborating with several well-known LSD protocols to launch multiple products, Tranchess also supports liquid staking for QUEEN tokens on Ethereum and BNB Chain. If users choose to stake ETH for qETH, they can earn an APR of 4.4%, with the current total staking amount exceeding $550,000. Besides staking rewards, users can also provide liquidity in the qETH/ETH pool on Balancer, where LPs will earn CHESS rewards and veBAL incentives, which can be used in more DeFi protocols. Of course, the platform will charge a 10% fee on the staking rewards earned by users, which will be distributed to node operators, the Tranchess fund pool, and weekly rebate distributions for veCHESS holders.
The BNBFund not only enhances the mining function of single asset yields but also adds a layer of Alpha returns. Specifically, the BNB fund stakes BNB to Tranchess validator nodes on the BNB Chain, earning an APR of 8% to 16%, and distributes this portion of rewards to all nQUEEN+ and nROOK+ holders (after deducting protocol fees). Users can also stake Q/B/R class tokens to earn rewards in CHESS tokens. For example, if a user stakes BNB to create nQUEEN, they can earn a 0.45% POS staking reward and a 3.7% to 11.7% CHESS reward.
"With the continued growth in demand for Ethereum, we expect liquid staking products like qETH, STONE, and related products such as staYSTONE and turPSTONE to continue to attract attention. The Ethereum spot ETF will increase institutional investors' interest in Ethereum and staking, thereby driving up Ethereum's value and network demand, leading to higher staking yields," Tranchess stated in a recent article.
As the BTCFi concept matures, it is worth continuing to watch whether Tranchess, which first introduced WBTC asset management on the BNB Chain, can leverage its current collaborations with projects like SolvBTC to further explore opportunities in BTCFi.
TVL Increased Over 240% This Year, Previously Funded by Binance Labs and Others
The impressive growth data showcases Tranchess's strong competitiveness. According to DeFiLlama data, as of August 24, Tranchess's TVL has exceeded $210 million, ranking second on Scroll, with a staggering increase of 241.9% this year.
As a DeFi protocol born during the DeFi boom, Tranchess announced the completion of a $1.5 million seed round in 2021, with participation from numerous institutions including Three Arrows Capital, The Spartan Group, Binance Labs, Longhash Ventures, and IMO Ventures.
Behind the backing of star capital, in addition to product strategy, the team is also a crucial factor. Tranchess co-founder Danny Chong has over 16 years of banking experience, having previously been responsible for the sales of foreign exchange and fixed-rate products in the SEA department at Crédit Agricole, while other members have rich experience working at institutions like Microsoft, Google, Morgan Stanley, and UBS.
Token economics is also an important component of the Tranchess ecosystem, with a total supply of 300 million governance tokens CHESS, of which 50% will be used for community distribution and incentives. Holders can use them to participate in community decision-making, voting, and paying transaction fees. Besides purchasing on the secondary market, users can also earn CHESS by staking QUEEN, BISHOP, or ROOK tokens (with a weight ratio of 3:4:2) or providing liquidity for AMM pools. veCHESS represents locked CHESS tokens, with lock-up periods ranging from one week to four years, and the exchange ratio will increase linearly (locking 1 CHESS for 1 year will yield 0.25 veCHESS, while locking 1 CHESS for 4 years will yield 4 veCHESS). veCHESS holders can vote on the distribution of Alpha returns between BISHOP and ROOK, vote on the weekly release of CHESS, receive 50% of the protocol's weekly income distribution, enhance staking efficiency, and share the previously mentioned 3% Turbo & Stable fund points income.
Additionally, Tranchess launched a new community management proposal last Thursday, indicating that future collaborations for Turbo & Stable will be decided by veCHESS users' votes. This not only further expands the application scenarios of veCHESS but also demonstrates the limitless potential for the rapid replication of the Turbo & Stable model.
Moreover, in the dark forest of DeFi, Tranchess is also focusing on security, having completed smart contract audits with PeckShield and Certik, initiated a bug bounty program with ImmuneFi, and reached cooperation with the DeFi insurance protocol InsurAce. According to the roadmap, Tranchess will continue to expand structured products, node operators, and X-Chain expansions in 2024.
Overall, this veteran crypto structured fund Tranchess provides more users with diversified risk strategies while enhancing the flexibility and efficiency of asset allocation. As the liquid staking sector continues to explode, the heat of the LSD sector will also inject strong momentum into Tranchess's competition in the DeFi market.
