Tranchess, an asset tracking DeFi protocol that prioritizes risk-managed solutions, announced that it has launched a BNB fund as a BSC validator, pivoting the protocol away from purely generating revenue from token emission (the creation and sale of new tokens).
This BSC fund complements the existing BTC and ETH tracker funds, which offers moderate leverage for yield farming.Danny Chong, the co-founder of Tranchess, told CoinDesk that the BNB fund marks V2 of Tranchess citing the new income streams available from acting as a validator (rewards from the network are given to validators 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 1,000 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-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.