A platform designed for crypto degens
Tranche Finance is a platform that allows users to split any yield-generating asset from the DeFi ecosystem into two perpetual assets. A fixed-rate asset that lets you manage your risk, and a variable rate asset that maximizes your returns.
The Tranche platform is developed by Jibrel and with its mainnet now live on the Ethereum blockchain, the Swiss-based blockchain development company is aiming to introduce risk management capabilities while maximizing returns to DeFi.
Before we go further it’s important to understand what a tranche is in the financial world to fully understand the terminology used in the article. A tranche is one of several related securities offered as part of the same transaction. In the financial sense of the word, each bond is a different slice of the deal’s risk. Usually, tranches are defined as different classes with different bond credit ratings, for example, Class A, Class B, and Class C securities.
How it works
The Tranche protocol integrates with any yield-generating token such as Aave’s aTokens or Compound’s cTokens to generate two new interest-bearing instruments. Firstly, a low-risk senior tranche with a fixed rate (Tranche A). Secondly, a high-risk junior tranche with a variable rate (Tranche B).
cTokens and aTokens are simply a back-end unit of record for the Compound and Aave protocols. When a user supplies cryptocurrency to the protocol, these tokens are used to keep track of the funds they have lent and any interest earned. Each time a user supplies funds to the lending pool, they are issued a corresponding balance in these tokens.
“While DeFi adoption has grown rapidly over the last few years, a high degree of uncertainty around the validity and security of these protocols still exists. With Tranche, low-risk users can opt for senior tranches, and be confident that their funds are safe in the event of a change in market dynamics or a hack. Those with a higher risk appetite can deposit into junior tranches and maximize their returns.” says Yazan Barghuthi, CEO and co-founder at Jibrel.
The SLICE Token
SLICE is a governance token that enables community members to have a say in the direction of the protocol and the use of funds of the Treasury. Initially, the Treasury will be seeded by the team with 3,000,000 SLICE, allowing the utilization of funds to incentivize and sustain the platform’s usage. Additionally, the treasury collects protocol fees and distributes staking rewards.
What can I do with Tranche?
Tranche has three core features: Tranche, Stake, and Vote. Firstly, users can earn a yield by depositing to tranches. By depositing USDC and Dai into Tranche A users can receive a fixed-rate return, or deposit into Tranche B and receive variable returns that are higher than the underlying protocol.
Secondly, users can lock up their SLICE and SLICE-LP tokens to earn additional rewards distributed on weekly, monthly, bi-annual and annual schedules. Lastly, SLICE holders dictate the direction of the protocol. Holders can vote on adjusting protocol parameters, introducing new pairs, integrating new protocols, or allocating treasury funds.
Stake it till you make it
Tranche is keen to maximize the utility of its SLICE token through 3 staking options. SLICE staking, SLICE-ETH LP staking, and SLICE-DAI LP staking. Staking enables the platform to ensure liquidity and incentivize participation in protocol improvements and governance. Users can easily stake these 3 tokens to receive SLICE rewards weekly with APYs ranging from 9.2% for simple SLICE staking up to 176% for staking SLICE with the MakerDao stablecoin DAI.
Risk or Reward
Given the meteoric rise of decentralized finance solutions recently it can be argued that users are mainly trying to maximize returns and experiment with innovative financial products. As opposed to looking for less rewarding fixed-rate or stable returns.
Tranche Finance is trying to create a platform whereby users can choose their level of risk in the investments they want rather than making do with cheaper, less secure options. With Tranche a user can be exposed to the same investment as a multi-million dollar fund but with a smaller portion of risk and of course, reward.
Connect with Tranche Finance
For business development and marketing partnership inquiries, please contact Mac Ocampo at [email protected]