# Tranche

Tranche is a protocol for *stratifying price risk* of crypto-assets. At the core, it allows users to deposit an asset in return for several `Tranche` assets, each representing a different risk level. The safer assets have relatively stable value, while the risky assets have value roughly equivalent to a leveraged position of the underlying asset.&#x20;

![](https://2960531599-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MkOcHevGAkolQq9Te-Z%2Fuploads%2F8Bt9Km5hCBzcvTMjUOAx%2FTranche%20Diagram.jpg?alt=media\&token=bb86acfa-20a4-4b85-af94-81e258732478)

The following sections will explain how this mechanism works and why it's useful.&#x20;