TrueFi Fresh Take in On-Chain Lending
TrustToken, makers of stablecoins including TUSD, has launched TrueFi, the decentralized protocol for uncollateralized lending, hitting $35 million in total value locked within 24 hours of going live. The TrueFi protocol introduces a new approach to on-chain lending, letting TRU holders vote on incoming borrowers and uncollateralized loan requests; creating new ways for TrueCurrency users to generate stable, high returns in DeFi; and empowering approved borrowers with fast, fixed-term, fixed-rate loans no collateral requirements.
Today, most lending platforms require borrowers to lock up assets (like Ethereum), often in excess of their loan amount, to borrow capital. TrueFi differentiates from these players in how it approves incoming loan requests, by having no collateral requirements, and in building with transparency in mind. While collateralized lending has been DeFi’s springboard to success to date, attracting billions of dollars of capital, uncollateralized lending promises even higher, more predictable interest rates in excess of eight per cent on stablecoins.
TrustToken’s launch of the TrueFi protocol, powered by TrustTokens (TRU), leads the charge in bringing uncollateralized lending to decentralized finance. TrueFi lenders who deposit TUSD into the lending pool will earn returns on all outstanding loans and may also farm TRU, with unallocated capital maximizing earnings via the Curve protocol. TrueFi lenders also enjoy full visibility into every element of the lending process, from borrower profile to loan approval and the movement of funds.
Beyond higher rates of return, TrueFi puts power in the hands of individuals rather than centralized ratings agencies. As vetted borrowers submit loan requests, TRU holders stake to approve or reject each proposal, collectively acting as a credit prediction market estimating borrower creditworthiness and loan desirability. At launch, TrustToken is bootstrapping TrueFi by distributing TRU to protocol participants, with a plan to progressively decentralize control of the platform into the hands of its users.
“The aim is for TrueFi to become the ultimate market-driven, automated credit rating and lending system, freeing money to move wherever it creates the most value” said Rafael Cosman, cofounder of TrustToken. “It’s a significant pillar in our mission to increase access to financial opportunities, and our wide distribution of TRU will let anyone join in shaping the future of finance.”
As of Nov. 22, 1.5 million TRU has been staked in favor of TrueFi’s first loan request by Alameda Research, with more major borrowers slated to join the platform shortly.