TrueFi is an uncollateralized lending DeFi protocol, powered by TRU. It allows lenders to earn high, stable returns on loaned cryptocurrencies (starting with TUSD) while having full transparency on how the loaned capital is allocated. Vetted borrowers, meanwhile, can use TrueFi for rapid access to fixed-term, fixed-rate cryptocurrency loans. TRU holders collectively assess the creditworthiness of the borrower and individual loan applications by staking TRU.
Though TrueFi was initially built by the TrustToken team, who previously developed five top fiat-backed stablecoins, TrueFi is following a path towards progressive decentralization and will ultimately put the protocol in the hands of the community.
TrueFi enables uncollateralized lending through the interaction of three stakeholders:
Lenders earn attractive APY on their cryptocurrency by lending TUSD or USDC to TrueFi lending pools, while enjoying full transparency of how their funds are allocated. Lenders may also farm TRU alongside their yields. TrueFi lending pools are controlled by TrueTrading, an affiliate company of TrustToken, Inc.
TRU Stakers act as risk management system for the protocol in return for TRU rewards and 100% of the fee generated by the protocol. They also signal the creditworthiness of each incoming loan request on the credit prediction market by voting YES or NO.
Vetted Borrowers request loans denominated in TUSD using loan tokens.
Lenders can lend their stablecoins (TUSD or USDC) to the TrueFi lending pools to earn attractive return.
The lending pools may then lend all Lender assets pooled this way to Borrowers based on the predefined strategies of each lending pool.
If you do not currently hold any TUSD you can mint it on the TrustToken app, or purchase TUSD on any of the 100+ exchanges or OTC desks that support it.
TRU stakers can stake their TRU tokens on the protocol. Staking TRU on the protocol enables Stakers to earn a portion of the fees generated by the TrueFi protocol. Stakers can also vote on individual loan requests to earn more TRU. Stakers can predict the outcome of a loan by voting for (YES) or against (NO) the event of a loan defaulting. This ratio of YES to NO TRU staked forms the basis of the TrueFi credit prediction market. It acts as a signal or parameter for TrueFi lending pools by helping the pools assess the risk of default for every loan application.
Borrowers get access to capital without any collateral. Currently, TrueFi is launching with a short list of approved borrowers. In the future, new borrowers may be added to the protocol through an approval mechanism led by TRU holders based on standards set by the community. Once the loan applications are approved by the lending pool, all borrowers are required to sign separate loan agreements before receiving the loan principal.
Legal action can be taken against the borrowers if they fail to return the loan principal and interest within the term. TrueTrading is currently responsible for pursuing legal recourse if a borrower defaults and may be replaced by another non-profit entity in the future as TrueFi progressively decentralizes.
Liquidity providers can yield farm TRU by providing liquidity on different decentralized exchanges. Once you receive your Liquidity Provider tokens from Uniswap for supporting the liquidity of ETH/TRU pair, you’ll be able to stake those LP tokens directly on TrueFi to start earning TRU. You can find more information about farming TRU in the Liquidity Mining section.
There are always inherent risks associated with DeFi but security has been a huge focus for our team.You can review our audits here. As of 3rd December, 2020 TrueFi lenders can also purchase smart contract cover through our friends at Nexus Mutual to hedge their risks when depositing into TrueFi lending pools. Coverage is paid out at the discretion of mutual members but has covered technical exploits in the past. This is not investment advice Please Do Your Own Research.