AMA Summary: TrueFi x Real Satoshi
Our “Ask Me Anything” with China’s top crypto community
On June 11, 2021, TrueFi co-hosted an AMA in simplified Chinese with one of China’s most influential crypto community, Real Satoshi.
The event invited Ryan Rodenbaugh, Business Development and Strategy Lead at TrueFi, and Ada Wu, China Community Lead at TrueFi, who introduced the key updates on TrueFi V3, protocol advantages, and the team’s upcoming plan.
Read on for our translated AMA recap:
Q1: It’s TrustToken’s second time joining our community, can you give us a brief introduction about TrustToken? What does it do, and what’s its vision?
Glad to be back with Real Satoshi. TrustToken built TUSD back in 2017. It’s now a billion-dollar stablecoin, but we wanted to make it more useful and lucrative to use. We started exploring the next big thing we wanted to build.
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 — and is a $11 trillion dollar market in traditional finance that DeFi has totally not touched.
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.
TrueFi is a collateral-free credit protocol. The goal is to provide lenders with sustainable, high yields while allowing borrowers to lend money without collateral, all powered by a crypto-native credit model that uses both on-chain and off-chain data.
Q2: TrueFi has recently released V3. What are some important updates?
Since the launch of TrueFi V2 in February 2021 — which delivered an improved staking model and Liquid Exit — DeFi’s first unsecured lending protocol has continued to hit major milestones across lending, borrowing, and product.
TrueFi V3 arrived with two extremely significant protocol upgrades:
- Credit Model: We have built a credit model by incorporating both on-chain and off-chain data that considers company background, repayment history, operating and trading history (in both cryptocurrency and traditional finance), assets under management (considering both the type of assets and custody), and other credit metrics; and generated the first-ever DeFi credit score that can be publicly displayed on the borrower’s profile.
- Multi-Asset Support: TrueFi aims to eventually allow nearly any ERC-20 asset to be used to generate a new lending pool, each of which can grow the protocol’s total value locked and net utilization. Our USDC pool was launched on May 20th and has ~$98 million TLV now. The USDT pool will be launching in a week around June 17th, soon to be followed by other popular assets.
For more information about TrueFi V3, please check:
Q3: Could you tell us more about the operating mechanism and technical implementation of TrueFi Credit Model?
TrueFi V3 launched with a credit scoring model in order to increase the sophistication of assessing creditworthiness with new borrowers. The model provides an objective TrueFi credit score that is publicly displayed in the borrower’s profile by gauging a number of on-chain and off-chain factors, with a score ranging from 0 (for no data) to 255 (the top possible score), and future plans to integrate with other DeFi lending markets.
The scoring model’s assessment criteria include:
- Company Background, including compliance, legal, accounting, and regulatory health, as well as review of corporate structure
- Repayment History, starting with TrueFi and eventually expanding beyond it
- Operating & Trading History, considering both crypto and traditional finance experience
- Assets Under Management, also considering the types of assets and their custody
- Credit Metrics, including asset coverage, leverage, liquidity and risk exposures
With the launch of V3, TrueFi’s credit model started playing a greater role in setting the terms of new loans — for now, only on TrueFi, but with utility across DeFi in the future. The credit model, while still rudimentary today, will continue to improve with the addition of new information sources like centralized exchange data, on-chain history across other protocols, and ongoing lending activity with the TrueFi protocol.
The grand vision for TrueFi credit is a composable, industry-accepted, decentralized gauge of creditworthiness, pulling in both on-chain and off-chain data while respecting borrower privacy, to bring nuance to crypto finance across protocols.
Q4: Could you give an explanation on how TrueFi’s uncollateralized lending works and how to mitigate risks?
It takes three parts to make TrueFi work:
Vetted Borrowers like Alameda Research, Amber Group, and Poloniex. Borrowers request capital and offer Lenders interest on the loan. Only institutional lenders are able to borrow right now, but TrueFi is exploring retail & protocol-to-protocol loans in the future. All Borrowers complete a background check (KYB), make their requests for capital publicly (no anonymous borrowers yet), and sign a legally enforceable lending agreement in case of default.
Stakers of TRU, the native TrueFi currency, review these Borrowers for creditworthiness, while also providing some protection to TrueFi lenders against loan default. TRU holders also participate in governance and guide the direction of the overall TrueFi platform.
Lenders deposit cryptocurrencies into TrueFi to earn a competitive yield. These deposits are used to fund loans to Borrowers. Currently TUSD and UDSC are supported, but more tokens will be supported in the future (including USDT this June, and likely WBTC and more). Unlike centralized lending projects, TrueFi Lenders have full transparency of how lending pool funds are allocated, making risks transparent.
The overall goal is to make TrueFi the ultimate credit protocol in DeFi, with the ability to move money wherever it creates the most value — instantly.
In terms of risks, it’s important to understand that lending has a risk of loss.
To Mitigate the Lending Risks:
- Borrowers we onboarded are based on a thorough Know Your Business (KYB) workflow and selected for longstanding, respected crypto-native institutions like Alameda, Wintermute, Poloniex, and more. With the development of our Credit Model, we shall see a more accurate and effective onboarding process with creditworthy borrowers.
- We created a legal framework for enforcing action against delinquent loans compatible with DeFi, even without collateral;
- Staked TRU: there are 31.95 % circulated TRU staked on our protocol right now to provide the protection for lenders in the case of loan default. That’s over 105 million TRU and over $33 million in USD value with current TRU price. At the time of default, at most 10% of staked TRU is liquidated to refill the affected lending pool per default.
- SAFU Fund: Originally discussed by TRU holders to protect lending pool depositors against default, the SAFU fund is now funded with +5 million TRU and is being integrated into the default response.
You can read more about Mitigating Risk here:
Q5: Compared to other protocols in the market, what are the advantages of TrueFi? Why should users choose TrueFi?
Differentiation: TrueFi is offering something no other protocol is — collateral-free loans — by doing something few other protocols can: bridging regulated, traditional finance with the innovation and speed of the blockchain.
Credit Model: TrueFi is powered by a credit model that supports borrowers taking out more favorable loans the more they utilize the platform.
Collaboration: TrueFi is possible because of all the relationships we’ve built and insights we’ve had as the makers of TUSD. We’re also contributing important DeFi primitives we hope will be used by other projects, like lending pools, on-chain credit, and loan tokens. We expect these elements will ripple throughout DeFi, growing our impact.
Yields: Loans that require collateral cannot offer the best yields in the long term — only uncollateralized lending can consistently deliver the highest unboosted yields.
Community: We’re lucky to have most of the most respected Borrowers, like SBF of Alameda; investors, like a16z Crypto; protocol partners like Binance, Chainlink, and Sushiswap; and ultimately TRU holders who are actively voting on loans, passing major proposals, and really driving decentralization forward. We are also working with top crypto PR and media platforms like ChianNews to promote and build our community.
For users to join our platform, I would say the reasons are:
- Coverage against losses: As I mentioned in the last question, we currently have over 105 million TRU staked (~30% of the full circulating supply) and +$5 million in SAFU fund that cover lenders against losses.
- Transparency: How are we generating yields? What are the risks we’re taking on by lending here? Who are we lending to? How is the company run? TrueFi does all this transparently, and with the support of TRU holders through progressive decentralization..
- Traction:
- TVL is over $230 million
- $105m in loans completed with no default
- Dozens of borrowers, dozens more being onboarded
- $200+ of millions in loanable assets
- Experienced team with multiple successful past projects
4. Yields:
There are 3 lucrative way to earn on TrueFi:
Lend Stablecoins: Lenders can lend TUSD and USDC, and soon USDT on June 17th, on TrueFi to earn interest (30–50% APYs)
Yield Farm LP tokens: Lenders can stake the ‘loan token’ (tfTUSD and tfUSC) on the Farm page to earn ~32% APY
Stake TRU: Stakers can earn TRU rewards by staking their TRU on the Stake page in exchange for ~44% APY. Staked TRU will be used for default protection.
Also, starting May 2021, you can start Stake TRU on Binance to earn ~29% APY with $0 ETH gas fee: https://www.binance.com/en/pos
Q6：Security is also what users are mostly concerned about. What efforts have you made to secure users’ funds?
It’s important to understand the platform risks:
- Standard DeFi Technical Risk: One of the most common threats to any DeFi protocol is hacking. And the most common prevention is rigorous code audits. TrueFi has undergone three deep audits:
- By Slowmist of TrueFi V1 completed on November 21st, 2020
- By ETHworks of TrueFi V2 completed on February 17th, 2021
- By CertiK of TrueFi V3, completed on May 17th, 2021
In all cases, the TrueFi core team received the audit results and solved any major threat vectors in advance of the code going into production, as is our standard. We are also recruiting an auditor to work on retainer through the launch of V4.
2. Platform Risk — loan default: we have already discussed this part in the previous question. To summarize: strict borrower onboarding process, credit model, staked TRU, and community SAFU fund.
Q8: How can TrueFi generate profit/revenue to maintain your project operation? What is its revenue model? How does it achieve investors and project win-win?
The core development team of TrueFi is currently funded by TrustToken, which has enough liquidity to be able to support TrueFi development for over a decade, both through savings and other lines of business (like TUSD operations).
TrueFi itself benefits from the appreciation of TRU tokens which fund its operations, and also collects loan origination fees that are saved in a community treasury to fund ongoing development, marketing, and community initiatives.
Finally, TrueFi is exploring new business models for the use of our credit score to other businesses (such as protocols, banks, and credit agencies) that would create a whole new funding channel for TrueFi and new utility for TRU.
TrueFi’s diversity of income sources, deep integration on TRU for governance and staking, and the new utility being explored for TRU in the credit model make it a great long-term opportunity.
To learn more about TrueFi’s business model:
Q9: What is your current target market for TrueFi? What are the plans for rapid growth in terms of users, global markets and partners?
The goal of TrueFi is to become the most widely adopted, most trusted protocol for unsecured on-chain lending, and crypto-native credit scoring.
To that end, we’re targeting three main players:
- Borrowers: For now we are pretty focused on borrowers that operate within the crypto markets (cryptocurrency trading firms, registered custodians, trust companies, and other lenders). A big part of this is that our current onboarding and credit review process is focused on these kinds of firms. We definitely get a lot of inbound interest from companies in traditional industries, but bringing on borrowers from new categories will require new versions of our credit model and we’re not ready for that yet.
Beyond that, we still have a ton of room to grow within our existing base of crypto-native borrowers. We’ve got ~20 borrowers now and have another 30 we are working to onboard over the next 3–6 months.
- Lenders: TrueFi offers some of the most competitive returns (10–18% base + 30–50% TRU boost) in crypto, even in a bear market, on stablecoin loans. This has attracted almost a quarter billion dollars to TrueFi, all supported by heavy marketing across press, events, social media, KoLs and more. We’ll continue marketing to crypto and non-crypto audiences heavily, promoting our comparably high and safe rates of return.
- Credit Scoring Partners: Longer-term as we develop the credit model to be more robust and prove out its usefulness via TrueFi, we hope to see other DeFi protocols adopt the TrueFi score. How cool would it be if Compound was able to offer partially undercollateralized loans to borrowers because they had a high TrueFi score? But this is more long term. We still have a lot of work to do developing the TrueFi score.
Q10: When does Multi-Asset Support launch? Could you tell us about what’s next for TrueFi?
Multi-Asset support feature is already live. Our USDC pool is at $92+ million TLV while the TUSD pool is at $110+ million TVL. The USDT pool will be launched this June as well.
Here are the features coming soon:
Lines of Credit
Lines of Credit will allow borrowers to take out loans with no fixed end term, substantially improving the borrower experience. This feature is still being developed in close partnership with TrueFi’s borrowers.
Tradable Loan Tokens
Tradable Loan Tokens will create markets for loans from given borrowers and increase TrueFi’s overall liquidity and the utility of the platform’s pool tokens. These assets are currently under close legal scrutiny, and it’s believed tradable loan tokens cannot launch until TrueFi is more decentralized.
TrueFi Backstop (SAFU) Fund
Originally discussed by TRU holders to protect lending pool depositors against default, the SAFU fund is now funded with +5 million TRU and is being integrated into the default response.
Broad ERC-20 Asset Support
TrueFi V3’s new stablecoin pools are the first step towards broad ERC-20 asset support by TrueFi lending pools. We expect to support all new assets in the coming months.
You can check our Roadmap here:
💻 Start using TrueFi app today: https://app.truefi.io/dashboard
💸 Also, for users who wants to start staking today, you can get TRU on Binance ( TRU/BTC, TRU/USDT, and TRU/BUSD.）, FTX （ TRU/USD and TRU/USDT））, Poloniex (TRU/USDT & TRU/BTC), Gate.io (TRU/ETH & TRU/USDT), MXC (variety of pairs and incentives), Sushiswap (TRU/ETH), Uniswap (TRU/ETH.)and more.
Check the full listing information here:
💬 Last but not least, please join our WeChat group by adding ‘TrueFi_Global’ on WeChat. We will have some good news announcing there for our community members very soon.
Community FAQ: The following questions were asked by Real Satoshi & TrueFi Chinese community.
Q1: How do you achieve the best security on the TrueFi chain?
We have hired auditing companies (Certik, etc.) to audit every major upgrade, as well as staff responsible for security audits.
Q2: Does TrueFi plan to support more public chains?
Not in a rush. However, our engineering team is interested in waiting for “Optimism”
Q3: Any well-known institutions have invested in TrueFi so far? Which projects have you partnered with?
Here are some of our major investors:
We have dozens of borrowers in process of review for onboarding as well.
Q4: What is this token economy? Will the platform token be repurchased?
Right now, we distribute 100% of token revenues to stakers. We might soon switch to a buy-and-burn model. Right now, an individual staker can earn thousands per month from fees
You can also find our token economy blog here:
🇨🇳 In Chinese : https://weibo.com/ttarticle/p/show?id=2309404646662080692842#_0
📚 In English: https://blog.trusttoken.com/truefis-tru-token-economics-7facea6651c0
For more information, please follow.
Website: https://truefi.io/
Twitter: https://twitter.com/TrustToken
Medium: https://blog.trusttoken.com/
Weibo (CN) : https://weibo.com/truefi
