MEXC Global Research: Market Analysis of Crypto Asset Structured fund Tranchess (CHESS)
1. Project Introduction
Tranchess is a decentralized structured fund protocol on Binance Smart Chain (BSC), which aims to meet the investment needs of investors with different risk preferences by disassembling a single investment category into several different derivatives investment tools.
Structured funds, also known as classification funds or tranche funds, are derivative instruments from the traditional financial markets. For example, suppose there is a sum of money as the main fund, and the main fund is divided into sub-fund A and sub-fund B. A and B are a group of structured funds that meet the needs of investors with different risk preferences.
Among them, A is used to invest in stocks with low risk and low return, and the bottom line of return is to breakeven; Part B is used to invest in high-risk and high-yield leveraged products. When the asset value of the main fund as a whole falls close to the principal value of A, Part B will also be liquidated and A will guarantee the principal.
The Tranchess protocol has four crypto funds, a main fund, and two sub funds: Queen (Main Fund), Bishop (sub-fund A), Rook (sub-fund B). Chess is used for protocol governance. The above corresponding assets are QUEEN, BISHOP, ROOK, and CHESS respectively. Among these:
Queen’s equity assets are the main fund, Queen Token, which is backed by the BTCB of the corresponding share as the value support. In other words, if investors want to own Queen Token, they must exchange the BTC-pegged asset BTCB according to the corresponding share proportion. However, it can also be purchased through USDC.
The obtained Queen Token can be split and converted into sub-fund Bishop and Rook. Bishop is used for the breakeven of financial management. That is, the holder provides liquidity to the holder of Tranche ROOK and only earns risk-free interest income every day.
Similarly, ROOK holders’ funds, ROOK, is borrowed from Bishop and is mainly used to purchase and track BTC’s fund shares to achieve leveraged investments.
CHESS is the governance asset of Chess, which is mainly used for transaction costs in the system and staking to obtain voting governance rights. If the CHESS holder obtains the voting governance right, CHESS needs to be locked to obtain veChess as the voting equity asset. CHESS can be locked-up for 4 years.
The above logical relationship is that investors can exchange BTCB for QUEEN, which can be used for mining and obtain CHESS as income. However, QUEEN can also be used as the main fund and divided into sub-funds, Bishop and Rook. Bishop is used for the breakeven of financial management, and Rook is used to obtain leveraged income.
The above assets CHESS, QUEEN, BISHOP, and ROOK can also be purchased in USDC in the secondary market.
CHESS is the governance asset of Tranchess with a total supply of 300 million tokens. The specific allocation of CHESS is:
- 20% unlocked in batches to the core team;
- 5% unlocked in batches to seed investors;
- 15% reserved for future investors;
- 50% used for liquidity mining;
- 10% for the ecosystem fund of Tranchess.
50% used for community distribution and incentives, of which 120 million tokens were distributed on Tranchess. On Tranchess, CHESS was initiated by itself. 300,000 CHESS tokens were distributed in the first week. In the second week to the fourth week, an additional 300,000 tokens will added to the sum of tokens in the previous week and distributed . By the end of the fourth week, 3,000,000 tokens were distributed in total. The detailed distribution schedule is as follows:
3. Financial Information
In July this year, Tranchess completed a seed round of financing of $1.5 million USD, led by Three Arrows Capital and Spartan Group, followed by Binance Labs, LongHash Ventures, IMO Ventures, and individual investors in many DeFi fields.
4. Practical Value
CHESS is mainly used for liquidity mining incentives, staking incentives for governance voting rights, and transaction costs. From the distribution of chips, 40% of the total tokens are in the hands of teams and investors. There will be a risk of selling after unlocking. The ecosystem fund accounts for 10% of the total. Therefore, it is worth supervising whether it will be used for ecosystem development, which is applicable to any project.
Note: This article is for information sharing only and does not constitute any investment suggestions.