Truly Crypto 101
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Truly Crypto 101

An Overview of the TUSD Lending Market in Major Ethereum DeFi Protocols

An Overview of the TUSD Lending Market in Major Ethereum DeFi Protocols

In the current gloomy market, many crypto investors prefer to hold safer, more reliable stablecoins to minimize risks and make decent profits by staking a single currency. It is better to sit on cash in a bear market, so safety and stability are the top priorities. Today, Truly will compare a number of the established Ethereum-based lending protocols, including AAVE, Compound, and the well-known non-collateral lending protocol TrueFi and offer a deep dive into the current investment options for TUSD across these platforms.

AAVE

AAVE is a decentralized system that allows users to borrow, lend, and earn interests on crypto assets without an intermediary. This flagship project in the Ethereum ecosystem tops the list among all DeFi projects in Total Value Locked (TVL), the number of users, and the value of tokens.

At present, TUSD on AAVE has reached $144 million, with a utilization rate of 10.55% and a supply APY of 0.09%.

In fact, TUSD can be used as collateral on AAVE. This means users who supply TUSD on AAVE can earn interest on their TUSD deposits and use TUSD as collateral to borrow other assets, further testifying to TUSD’s safety and stability. There are 33 lending markets on AAVE Ethereum Market, including ten stablecoin projects. However, only four stablecoin projects, including TUSD and USDC, can be used as collateral assets on AAVE.

It is worth highlighting that TUSD’s 80% MAX LTV on AAVE ranks high among the limited projects that can be used as collateral assets. MAX LTV is an index of the maximum amount of assets that can be borrowed with specific collateral. For example, the MAX LTV of TUSD is 80%, which means for every 1 TUSD deposited as collateral, users can borrow up to 0.8 TUSD worth of other crypto assets.

Currently, the stable APY is 10.81% and the variable APY is 0.53%.

TrueFi

TrueFi is a fine example of a non-collateral lending project. Launched in November 2020, TrueFi started its operation with the founder of FTX, Sam Bankman-Fried (SBF), as the first TUSD borrower on the platform.

Most DeFi lending platforms now operate with over-collateralization to minimize the risk of bad debts. In other words, if users want to borrow assets worth 1 ETH, they need to post assets worth more than such amount as collateral. Apparently, over-collateralization leads to a low fund utilization rate. Besides, users have to buy collaterals before they can borrow funds, which inevitably increases the cost of borrowing. In contrast, non-collateral lending is more appealing but requires high levels of trust.

To ensure repayment and reduce bad debts, borrowers on TrueFi must complete KYC verification first. Only after being reviewed and whitelisted by the TrustToken team can they apply for loans. As KYC verification and credit review are mostly required in CeFi, TrueFi is slightly different from other DeFi projects on this front. The platform only makes loans to institutional investors. After receiving borrowers’ applications, lenders will vote to decide whether to approve them and take on the default risk.

Although retail users cannot borrow on TrueFi, they can deposit TUSD on the platform to earn yields. TUSD now offers a supply APY of 7.76%, with a total supply of $27.09 million on TrueFi.

Compound

Compound is an established lending protocol whose security has stood the test of time, with its performance running off the charts. As of now, the total supply of TUSD on Compound is $82.14 million. The TUSD DeFi staking event is now live on OKX, where users can earn an APY of 5.63% by staking TUSD, with the TUSD team subsidizing 5.5% of it. This gives investors an excellent opportunity to earn better returns than other stablecoin events on OKX.

Don’t worry if you don’t have sufficient TUSD to join the event. Users can stake assets including USDC, DAI, and ETH on Compound and borrow TUSD with an APY of only 0.95%, with which they may join this DeFi staking event and earn an APY of up to 5.63%. TUSD offers top-level security as a fiat-backed stablecoin, while OKX is a well-established, well-tested crypto exchange. An excellent investment option under the current market conditions, this event offers investors solid returns while guaranteeing the security of their assets.

Closing Thoughts

That completes how TUSD works on the three major DeFi platforms. In the crypto winter, no one would know whether the market has hit bottom. Thus, it is a sound choice to earn stable yields with TUSD on major lending protocols.

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TrueUSD

TUSD is the world’s most trusted stablecoin, fully backed by USD and independently attested live and on-chain, now moving billions of dollars around the world.