What is Tranche?

In structured finance, a tranche refers to one of a number of similar securities or a specific segment of investments created from a pool of securities. Tranches are typically used to divide risk or other characteristics in ways that are marketable to different types of investors and fit different investment strategies. For example, as they relate to bonds, tranches are usually thought of as different "classes" of notes, all of which have different bond credit ratings. The traditional model of the tranche has recently been modified to work with different blockchain protocols.