TrueFi V4: The SAFU & Scalability Upgrade
An even safer & more powerful TrueFi goes live August 18th, 2021
TrueFi is thriving. With an infusion of fresh capital, new exchange partners, and rapid growth in both outgoing loans and the total value locked in the protocol, TrueFi is well on its way to becoming a multi-billion dollar protocol.
TrueFi’s path to Billions in TVL:
- With $12.5m of new capital raised from incredible partners Blocktower Capital, a16z, and Alameda Research, TrueFi is well capitalized to grow its talent, awareness, and impact.
- Following new listings of TRU to Coinbase , Coinbase Pro, ZB.com, and the new TRU margin trading feature on Binance, the TRU community is growing quickly, with even greater access to the global crypto sector and a simple fiat-to-TRU ramp. TRU is now held in over 4,000 individual wallets and listed on nearly all major exchanges.
- Powered by credit scoring launched in V3, TrueFi is able to support an ever-growing pool of borrowers with high loan throughput and evolving risk models. These credit scores improve with every new loan and repayment, and have been instrumental in the protocol’s latest origination milestone: over $400m in collateral-free loans, with zero defaults.
As of writing, TrueFi’s total value locked has just crossed an incredible milestone: over $1 billion in TVL. With 10x the total value locked, TrueFi will continue to develop its team, community, and technology.
To that end, TrueFi V4 is a major scalability upgrade to the protocol’s core infrastructure. V4 also represents the “final” design of the core TrueFi protocol: while the TrueFi roadmap will continue to introduce new features and products, future upgrades are likely to feature fewer changes to the core function of the protocol and come increasingly from the TrueFi community. TrueFi, as originally envisioned at inception, will fully arrive on August 18th, 2021, with the launch of TrueFi V4.
Continue reading to learn about the coming changes, designed to make TrueFi more scalable, more resilient, and more accessible to all — and when you’re done, join the discussion in Discord or Telegram.
Built for Scale: Meet TrueFi V4
V4 overhauls the handling of defaults, adds automatic interest rate pricing for borrowers (a prerequisite to lines of credit), and moves all farming to a single Liquidity Gauge contract to scale farms in TrueFi. It also includes an overhaul of the TrueFi frontend, with a number of quality-of-life improvements in the UI for new and veteran users alike.
The TrueFi Secure Asset Fund for Users (AKA SAFU)
Long demanded by the TrueFi community, TrueFi’s SAFU doesn’t just offer TrueFi lenders a new layer of protection — it also serves an important management role integral to the smooth, fair, and largely automated resolution of defaults. In V4, the SAFU becomes the primary responsible party for any default accrued by the protocol, and is also granted a few approaches for making lenders affected by a default whole.
While seeded with 5 million TRU by TrustToken, the SAFU is designed to allow for funding by any external party and, aside from capital the SAFU receives from the slashing of staked TRU in case of default, it may one day be funded directly through a novel fee structure incorporated into the TrueFi protocol. The SAFU’s funds are used exclusively for making TrueFi lenders whole in the case of default, with management of these funds handled by an community- approved address only when automated management is impractical or financially inefficient. The SAFU will follow TrueFi’s commitment to progressive decentralization, relying less on centralized management over time.
Read on for a summary of TrueFi’s SAFU default workflow, presented as an enhancement (not replacement) of TrueFi’s standard default response:
Following the launch of V4, TrueFi defaults will be managed as follows:
1. TRU Slashing: Up to 10% of staked TRU is transferred to the SAFU to cover the principal plus full amount of expected interest of the defaulted loan (the “Defaulted Value”).
2. LoanToken Buyout: The TrueFi Lending Pool transfers the pool’s bad debt to the SAFU, in exchange for the full expected value of those assets before default.
3. TRU Liquidation: If the SAFU’s liquidity is insufficient to cover the full Defaulted Value, the SAFU manager may sell TRU to fund the buyout of bad debt — for the asset in which the defaulted loan was denominated.
4. Deficiency Claims: If the SAFU’s full holdings and the value of slashed TRU are together inadequate to satisfy the Defaulted Value, the lending pool is granted ERC-20 tokens (“Deficiency Claim” tokens, minted by the SAFU) that represent a claim to funds recovered from the defaulted borrower.
5. Collections: Funds recouped from the defaulted borrower through pursuing legal claims (which will be the responsibility of the TrueFi DAO) will be used to purchase the asset in which the defaulted loan was originally denominated. The lending pool will have the first claim to the recovered assets, capped at the value of the principal and full expected interest of the defaulted loan. After lenders are whole, funds in excess of the Defaulted Value will be claimed by the SAFU to replenish its treasury and the assurance it provides to lenders.
6. Loan Token Burn: Once the legal recovery process against the defaulted borrower is resolved, recovered funds are used to burn the bad loan tokens held by the SAFU for the underlying value of those tokens. If any portion of the defaulted loan’s principal & expected interest are not recovered, the loss is realized with the burn of all related Deficiency Claim tokens, which will decrease the Lending Pool token price.
For an even more nuanced breakdown of the TrueFi SAFU, continue to the TrueFi Github for technical detail.
Prototyping Lines of Credit
TrueFi’s goal has always been to free money to move instantly to where it creates the most value. Lines of credit are a major milestone towards perfect capital efficiency, allowing TrueFi to increasingly automate setting interest rates and lending as a whole.
Starting at least a month after the V4 unlock, pending the completion of a thorough audit, TrueFi borrowers with sufficiently high credit scores will get access to open lines of credit. Borrowers using lines of credit can withdraw and repay debt at any time, rather than submitting individual loan requests, at variable rates calculated automatically by the protocol. Fixed-rate, fixed-term loans will remain an option for all whitelisted borrowers.
Lines of credit will be funded from the same lending pools as TrueFi’s fixed term loans, and the terms of these lines of credit (such as credit limit and rate) will largely be dictated by a borrower’s credit score. Lines of credit will accrue interest at each block and the interest accrued must be paid on a monthly basis. The full outstanding credit balance must be repaid in full every 365 days from the date the credit request is approved.
Prototyping: Because TrueFi credit scores are not yet able to update in real time to reflect a borrower’s evolving trading positions nor the overall state of the market, and because more data is needed to assess how lines of credit are used by borrowers, the lines of credit product is being prototyped with certain centralized risk controls. As lines of credit and credit scoring both become more robust, some or all of the centralized controls described below may become decentralized, automated, or deprecated entirely:
1. Regular checks of borrower’s health, reflected in credit score adjustments if appropriate
2. Mandate to reduce borrowers’ credit limits at any time, or to suspend borrowers from making new loans
3. Borrower agreement legal covenants, as part of a master loan agreement
4. Selective rollout of lines of credit to borrowers, with the highest credit scores and substantial repayment history
On-chain lines of credit will be another world first for TrueFi — and to get it right, a period of testing and refining both this new lending product and the credit scores that inform it is a must. This prototype launch paves the way for a full unveiling of lines of credit in a future TrueFi upgrade.
Learn more about the design of Lines of Credit on the TrueFi Github.
TrueFi Liquidity Gauge
TrueFi V4 brings the protocol one step closer to broad ERC-20 asset support with the launch of the TrueFi Liquidity Gauge. Inspired by DeFi pioneers Curve and Sushiswap, TrueFi’s liquidity gauge makes managing token incentives simple and infinitely scalable, while also reducing governance and technical overhead necessary to manage TRU farms.
With the introduction of V4, former individually managed TRU farms will now be brought under the management of the Liquidity Gauge, which will allocate TRU to each farm proportional to the weight (also called “allocation points”) of the given pool.
At launch, all pools will be weighted evenly, with TRU incentives allocated on a weekly rotation. Snapshot (TRU community) voting will then allow changes to the total outgoing TRU as well as the weights of any pool, which will proportionally increase or decrease the incentives remaining for the remaining pools.
This model greatly simplifies farming TRU and scales for any number of assets. It may, however, demand certain users (specifically TUSD lenders) migrate their assets to continue receiving rewards.
The Liquidity Gauge is now live at:
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TrueFi UI Overhaul: Dynamic Suggestions & Quality-of-Life Improvements
The TrustToken team has always been focused on growing access to financial opportunities. That’s also why catering TrueFi to only the most experienced cryptocurrency traders would never be satisfying to the core product team, and why TrueFi is constantly undergoing user interface and experience improvements.
TrueFi V4 comes with a collection of interface improvements too long to list, all designed for newcomers and veterans alike. Some of our favorites include the following:
- Dynamic menu suggestions: TrueFi V4 can read your mind — or at least, your connected wallet — and highlights the most appropriate next action to maximize your return on assets. As an example, a Metamask user with TUSD in their wallet would see a highlighted “Lend TUSD” button on the Lend page, and after finalizing the TUSD loan, they will see a second highlighted button suggesting the user stake their tfTUSD to earn farming rewards.
- Integrated education & FAQ: DeFi can be tricky — so as part of building TrueFi for all, the protocol now integrates relevant introductory materials and FAQ links throughout the UI to introduce key concepts like staking, describe the utility of various platform tokens, and giving context on key metrics on mouseover of the subtle (?) tags.
- Simpler workflows, deeper analytics: The UI has been simplified to focus each panel of the protocol on a key activity, and set in order to respect the standard user progression: from the home panel, to lending, to farming, to staking. In the meantime, the Analytics panel has been made more robust for superusers, with full active and historical info on loans and borrowers, filtered by asset type, loan status, and more. You can also download all our protocol activities as a CSV.
- Add TrueFi Tokens with a click: Navigate to the footer to inspect all the main TrueFi tokens and add them to your connected Metamask.
- Don’t miss a thing with our Announcement Bar: We’re taking the news off Twitter and piping it straight to the protocol, with the launch of our announcement bar, used to promote the most important things going on for TrueFi.
The TrueFi product team is continuing to improve the protocol experience, from solving liquidity with Liquid Exit, to creating robust educational materials and documentation, to maximizing transparency with both TrueFi-native and 3rd party transparency tools. We rely on your feedback to improve the product experience: please let us know how we can make TrueFi better for you in Discord now!
TrueFi has been live for less than a year, and the protocol has already accomplished things we only dreamed of in 2020. The core team remains proud and energized yet humble, the TrueFi community remains ever brilliant and helpful (in fact, “TrueFi” was a community-suggested name) — and we’d love for you to join both: TrustToken is hiring for a range of senior & junior roles, and the doors to our Discord are open to all.
We have huge plans for TrueFi — so join us, because you’re not late; you’re still early.
Get Involved in TrueFi
🤑 Earn: The best way to get started with TrueFi right now is by lending TUSD, USDC or USDT to the newly boosted lending pools. Get started by clicking Lend on the Pool page.
👩🎓 Learn: Get to know more about TrueFi in our Litepaper or YouTube, then visit our blog for in-depth posts around roadmap, tokenomics, and more.
🤝 Connect: Follow TrueFi on Twitter for the latest news, and join us in Discord to participate in the conversation, or subscribe to Substack for high-level updates by email.
