How Tranchess Works: Funds, Splitting and Merging
2 min read
Step-by-step explanation of how Tranchess works: depositing into a fund, minting QUEEN, splitting into BISHOP and ROOK, and merging back.
Step 1: Create QUEEN
A user deposits the underlying asset (such as BTC, ETH or BNB on the supported chain) into a Tranchess fund and receives QUEEN. QUEEN tracks the net asset value of the fund — holding it is similar to holding the underlying asset, with added protocol rewards.
Step 2: Split into BISHOP and ROOK
QUEEN can be split into BISHOP and ROOK. BISHOP behaves like a fixed-income instrument that earns interest; ROOK takes on leveraged exposure to the underlying asset and pays BISHOP's interest. The full mechanics are in QUEEN, BISHOP & ROOK explained.
Step 3: Merge, trade or redeem
BISHOP and ROOK can be merged back into QUEEN at any time, and QUEEN can be redeemed for the underlying asset. Tranche tokens can also be traded on the protocol's exchange. When ROOK's leverage drifts too far, the protocol triggers a rebalance.
Holding tokens in the protocol earns CHESS emissions, which can be boosted by locking CHESS.
Independent educational resource, not affiliated with Tranchess. Nothing here is financial advice. Crypto assets are volatile — do your own research.
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