DeFi Protocol Tranchess Becomes Binance Smart Chain Validator Node, Launches Fund

Running a validator node brings in additional revenue, said co-founder Danny Chong.

AccessTimeIconJan 13, 2022 at 10:59 a.m. UTC
Updated Jan 14, 2022 at 10:47 a.m. UTC

Tranchess, an asset tracking decentralized finance (DeFi) protocol that prioritizes risk-managed solutions, has launched a BNB token fund as a Binance Smart Chain (BSC) validator. The move is intended to shift the protocol away from purely generating revenue from the creation and sale of new tokens.

  • This BNB fund complements the existing bitcoin (BTC) and ether (ETH) tracker funds, which offers moderate leverage for yield farming.
  • Danny Chong, the co-founder of Tranchess, told CoinDesk the BNB fund marks version 2 of Tranchess because of the new income streams available. Acting as a validator means rewards from the network for processing and verifying transactions on a Proof-of-Stake network.
  • In an interview, Chong cited the stringent validator requirements of BSC as a reason why Tranchess picked it over over PoS protocols for its expansion. One example is the higher threshold of staking to validate: While the Ethereum network requires a minimum of 32 staked ether, BSC requires nearly 10,000 staked BNB (worth $4.6 million) though many have upwards of 800,000 staked BNB (worth approximately $384 million). Using BSC also brings the possibility of opening up cross-chain compatibility, he said.
  • “The complexities involved in being a validator currently excludes many protocols from transforming their pure token emission model into a more diverse revenue model that generates consistent alpha returns for users,” he said, noting that inactive validators or ones the community deems aren't pulling their weight are banned from BSC.
  • Tranchess acting as a validator helps BSC become more decentralized. With a relatively small number of validators, BSC has been criticized for its centralization.
  • Another example of a similar model can be found with Band Protocol, a data oracle. It runs a validator protocol on the Fantom network. Band Protocol earns income from being a validator, which in turn adds to the token's value.
  • In a tweet from April 2021, Messari's Wilson Withiam pointed out that many of the existing validators on BSC have close ties to Binance.
  • In August, Tranchess closed a $1.5 million round led by Three Arrows Capital and Spartan Group.
  • Tranchess’ Chess token is up 8.6% on the day according to CoinGecko, and is set to open the US session at $1.86. BNB was up 4.5% during the Asia business day.

CORRECTION (Jan. 14, 10:47 UTC): Corrects to say BNB fund in first bullet point, original said BSC. Corrects minimum number of BNB staked to 10,000 from 1,000 in third bullet.


Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.