Introducing Tranchess Swap | Part I
Tranchess Swap is the marketplace to trade QUEEN, BISHOP and ROOK with USDC. For anyone who doesn’t have any BTCs or wants to customize their portfolio positions further, Tranchess Swap is the easier and quicker way. Tranchess Swap adopts a unique mechanism designed to balance security and efficiency. The novel design could be confusing to navigate around for some users, especially for many DeFi locals who might be more familiar with AMMs. This article is the first guide on Tranchess Swap, focusing on some basic yet frequently asked questions.
What is Tranchess Swap
Tranchess Swap is a secondary market where users purchase QUEEN, BISHOP, and ROOK directly with USDC. It adopts a Premium-Discount Orderbook mechanism, a first in the world of decentralized finance. So rather than trading the live prices of tokens, users trade on the premiums or discounts of a forward-starting 30-minute TWAP (Time Weighted Average Price). Tranchess defines every 30-minute window as one Epoch; orders placed in the current Epoch will use the averaged NAV of the next Epoch as the base of matching price, which is settled and claimable in the Epoch after the next.
Now, this may still sound complicated, but don’t worry, Tranchess will manage the time epoch for you automatically.
Tranchess gives users an estimated time around which their orders will be settled and claimable. Come back around the indicated time to claim and stake your assets, so as to start earning CHESS immediately!
Some might have noticed the “Advanced” feature on the trading page. Use this feature to check the full depth of the orderbook, find the optimal price range, or enter “Post-only” mode. Post-only, or as how TradFi might call it, is which a“maker” (as opposed to taker), places orders in the market and provides liquidity. Instead of instant matching, these orders enter the orderbook and have a minimum size requirement of 2000 USDC or equivalent worth of QUEEN, BISHOP, ROOK.
In this article, we won’t go into the details of the post-only mode. But if this article is too elementary for you, we encourage you to test out the post-only feature and try out your own trading techniques.
Before moving on to the next section, let’s not forget to mention, Tranchess Swap charges ZERO trading fee. The only cost would be the gas fee since it’s pure on-chain matching.
What Tranchess Swap Can Help You Achieve
Tranchess recently added a new function called “Compare tokens.” You can find it on the front page and under Tranchess Swap. Use it to help you decide which token you want to buy through Tranchess Swap.
Tranchess is known for its rich DeFi features; Each of the three tokens shares some unique characteristics that cater to specific user type of needs. Tranchess Swap provides a quicker means for anyone that wants to customize and differentiate their portfolios to buy and sell the tokens they want. Comparing to the Primary Market, which is mainly for long-term BTC holders who already have BTCs and want to mint QUEEN to yield CHESS, the Swap market allows users to sell the tokens that don’t meet their requirements or buy the token to build their ideal investment combination.
On the Compare Tokens page, the all-time NAVs, latest NAVs, tokens’ unique characteristics, and the staking APRs were designed with the user in mind. Since the QUEEN token is our more well-known token, we will focus on BISHOP and ROOK in this article. Both tokens can be obtained by splitting QUEEN in the primary market, but trading them through Tranchess Swap can be more efficient. For those who want to learn more about QUEEN, please check out our previous post at:
BISHOP is the yielding tranche that provides a competitive interest rate on USDC — Best suited for those who have lots of “cash” (USDC) on their hands but are hesitant to invest in any crypto asset at the moment.
Bishop’s interest rate contains two parts: USDC BORROW rate drawn directly from VENUS and an interest rate top-up determined by community voting. Anyone familiar with lending protocols must know that the borrow rate is usually higher than the supply rate, and the supply rate is the rate users get when lending their USDC out for a stable yield. So converting USDC into Bishop means earning slightly higher than most other lending protocols; Including the community interest rate ballot, which is now around 1.2%~1.5%, it is overall a decent and steady yield on the idling USDCs.
To realize the interests earned, simply sell Bishop tokens through Tranchess Swap for USDC again. It takes up to 45 minutes to settle the trade, so you might lose a little spread in between, but it’s relatively trivial.
ROOK is the leveraged tranche that’s essentially “borrowing” from BISHOP to invest in BTC. For the more aggressive BTC holders or active traders, ROOK caters to the need.
For the strong believers of Bitcoin, going leverage long on BTC is never old. ROOK was designed for them and their firm belief has definitely paid back since Tranchess launched in late June 2020. ROOK’s NAV has risen more than 50% (till this post is drafted), comparing to QUEEN’s already decent 26% rise.
Between Sep.26~27, ROOK earned 10% bullet in 24H due to the market volatility caused by regional regulation impact. The leveraged feature grants ROOK an attractive speculative opportunity similar to the ones offered in TradFi. We’ve noticed that the trading volume of ROOK skyrocketing every time the BTC price goes through a dip. This seemingly counterintuitive behavior is generally due to the expectation of a short-time price rebound. Others might buy ROOK at a time they deem suitable to benefit from the leveraged position and then quickly sell ROOK to avoid future uncertainties.
Of course, leveraging on crypto assets can also incur higher losses. Evaluate your risk carefully before trading.
In the recent protocol update, Tranchess launched the Boosting feature and a yield simulator for anyone who wants to perfect their portfolio. As some might have noticed, a more balanced token position helps to maximize the potential max boost factor. Specifically, a higher share of BISHOP & ROOK in the staking account might help achieve a higher potential max boost factor.
There is still much more to explore on Tranchess Swap and we have only touched on the basic essentials. Leave a comment and tell us what you would like to see in future posts or how you have been using Tranchess to enhance your DeFi yield.