Meet TrueFi, the DeFi Protocol for Uncollateralized Lending
Earn high yields on stablecoin loans and borrow capital without collateral
Introducing TrueFi, the DeFi Protocol for Uncollateralized Lending
On-Chain Lending with High Yields and Borrowing Without Collateral
TrustToken is launching TrueFi, the protocol for uncollateralized lending, powered by the TRU token.
At launch on November 21st, TrueFi will allow vetted borrowers to request loans denominated in TUSD, TRU Stakers to assess the creditworthiness of the loans, and TUSD lenders to earn attractive APY on their stablecoins while also farming TRU. TrueFi is actively following the path of progressive decentralization putting control in the hands of the community.
While much of DeFi’s present success has been built on collateralized lending, uncollateralized lending is rightly seen as the next step for DeFi by those on its cutting edge. Uncollateralized lending provides an opportunity for lenders to earn long-term, competitive returns.
History: Why We’re Building TrueFi
At TrustToken’s inception in 2017, our team envisioned a future in which traditional assets would move to the blockchain, taking advantage of the speed, cost savings, and borderless nature of decentralized protocols.
The thesis has played out in part: while global stablecoins (like our own), commodities, and some financial assets are increasingly moving on-chain, most real-world assets like real estate have struggled to find the infrastructure and demand necessary for a robust marketplace.
The explosion of DeFi introduced a new asset class with huge demand on the blockchain: debt.
As lending and borrowing grew at a breakneck pace, our work as a stablecoin provider gave us a front row seat watching DeFi yields rise and fall. From supporting Bitcoin miners with stablecoins, to providing leverage to trading desks, to the rise of yield farming, we watched centralized and decentralized lending platforms alike compete to find or build new ways of earning high, usually fleeting, yields — most prominently on USD-pegged stablecoins.
TrustToken Enters Uncollateralized Lending
We looked to traditional financial markets for a vehicle that yields high returns, at consistent and predictable rates with manageable risk profiles and landed on uncollateralized lending. Moving the uncollateralized lending market onto the blockchain opens up access to lenders of nearly any size and background.
After years of building in crypto, we’ve found the most interesting products act as bridges between traditional and decentralized finance. The TrustToken team has developed some unique strengths by developing and operating five top fiat-backed stablecoins serving over 100 countries, and with TrueFi, we’re bringing these to DeFi:
1. A legal framework for enforcing action against delinquent loans compatible with DeFi, even without collateral;
2. A longstanding, trusted reputation with retail and institutional users alike to bootstrap a base of high-quality borrowers and lenders, many who are TUSD users with a proven track record as borrowers and lenders; and
3. Global fiat-backed stablecoins that act as an easy on-ramp to TrueFi and beyond.
Product: What TrueFi Is and How it Works
We’re proud to introduce TrueFi, a protocol for uncollateralized lending, and TRU, the native token used for staking and voting on loan requests.
The goal of TrueFi is to bring uncollateralized lending to DeFi. This helps cryptocurrency lenders enjoy attractive, sustainable rates of return, while giving cryptocurrency borrowers predictable loan terms without requiring collateral.
Importantly, all lending and borrowing activity on TrueFi is fully transparent, allowing lenders to fully understand participating borrowers and flows of funds engaging with TrueFi.
How TrueFi Functions Today
1. Lenders (like you) add TrueUSD into a TrueFi pool to be used for lending, earning interest and farming TRU. Any unused capital is sent into the Curve protocol to maximize earnings.
2. Borrowers (like OTC desks, exchanges, and other protocols) submit proposals to borrow capital from the pool. They submit the amount of capital they want, the % APY they’re offering, the term, and the Ethereum address that will receive the loan capital if the proposal is approved.
3. Borrowers borrow funds from the TrueFi Pool by submitting requests subject to approval by TRU Stakers vote on these proposals by staking their TRU on their choice of “Yes” or “No” for individual loans. Each vote exposes participating TRU holders to upside or downside based on if the loan ends up being successfully repaid, and so TRU Stakers are incentivized to vote carefully. In TrueFi V2 and V3, these decisions will be increasingly made by a credit model.
4. The Pool smart contract approves or rejects the loan based on the Pool’s risk parameters and Yes/No votes by TRU Stakers.
5. The Borrower must return the principal and interest on or before the term expires. Delinquent borrowers will face legal action pursuant to the loan agreement signed
In the future, we also plan for TRU holders to be able to meaningfully direct the future development of the TrueFi platform by participating using TRU.