Deals in any kind of market structure (fund, syndicated loan, etc) can contain multiple tranches. As explained before, the senior tranche will be filled by the pool as soon as the more junior tranches have been fully funded. Underwriters invest in the more junior tranches after having done due diligence on the deal and the borrower. In return for their investment, the underwriters receive tranche tokens. Tranche tokens are deal-tranche-specific, fungible, non-transferable tokens.
For every tranche of every deal, in every market, a unique token is created.
The tranche tokens belong to the family of fungible tokens, meaning that two underwriters who invest in the same tranche of the same deal will have the same type of tranche token in their wallet. If they invest in a different tranche of the same deal or the same tranche of a different deal, the tranche tokens will be different.
Due to regulations, tranche tokens cannot be made transferable as a KYB'd/whitelisted investor could transfer its tranche tokens to a non-trusted investor. Therefore, the tranche tokens are made non-transferable. We are working on an OTC desk and secondary market to make transfers between trusted stakeholders possible.
Tranche tokens to keep track of tranche investments
Unlike the LP tokens, which have an underlying price, tranche tokens are issued on a 1-1 basis. Example: Let's say you invest 100k USDC in the junior tranche of a deal, you will receive 100k (junior) tranche tokens. If the total size of the junior tranche is 300k, a total of 300k tranche tokens will be issued; meaning that you have invested 1/3th of the total capacity. When the deal ends (or when early withdrawals are activated), you will be able to withdraw 1/3th of the repaid principal + interest of that tranche.