A Tranche has become a popularized financial term in traditional finance, most frequently in the context of mortgage-backed securities (MBS). Tranches are essentially pieces of a pooled collection of securities that are split up by risk in order to be marketable to investors with different risk appetites. Tranches usually range from the lowest-risk (AAA) super senior on the top of the credit structure, to the highest rewards (BB and lower).&nbsp;
<img src="https://2963555165-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFJ6zbXbgFXVZp3qunySS%2Fuploads%2FPN6Ll2SVN0snDQJLDfcy%2FIm1%20(1).png?alt=media&token=44136a78-aaf3-4232-b64f-f77a3144051f" alt="undefined" style="float:none;height: undefined;width: undefined"/>

In the context of LEVEL, each tranche represents a pool of assets such as BTC, ETH, BNB, and stablecoins. By offering different risk profiles, each tranche allows LLPs to choose how much risk they are willing to take. LEVEL offers 3 tranches for LLPs:
<ul>
<li>Senior Tranche (AAA) — lowest risk and lowest APR </li>
<li>Mezzanine Tranche (AA) — medium risk and medium APR</li>
<li>Junior Tranche (BB) — highest risk and highest APR&nbsp;</li>
</ul>
Here's a video explaining how LEVEL liquidity pools, called Tranches, work.
<iframe allowfullscreen width="undefined" height="undefined" src="https://www.youtube.com/embed/ObDCEm1lmeQ" frameBorder="0"></iframe>

A Tranche has become a popularized financial term in traditional finance, most frequently in the context of mortgage-backed securities (MBS). Tranches are essentially pieces of a pooled collection of securities that are split up by risk in order to be marketable to investors with different risk appetites. Tranches usually range from the lowest-risk (AAA) super senior on the top of the credit structure, to the highest rewards (BB and lower). 
 

In the context of LEVEL, each tranche represents a pool of assets such as BTC, ETH, BNB, and stablecoins. By offering different risk profiles, each tranche allows LLPs to choose how much risk they are willing to take. LEVEL offers 3 tranches for LLPs:
Senior Tranche (AAA) — lowest risk and lowest APR 
Mezzanine Tranche (AA) — medium risk and medium APR
Junior Tranche (BB) — highest risk and highest APR 
Here's a video explaining how LEVEL liquidity pools, called Tranches, work.
 


What is a Tranche?