Summary

TrueFi is the first decentralized finance (DeFi) credit protocol for lending and managing money. TrueFi’s funding marketplace is built on Ethereum’s Optimism solution, which enables collateral-free lending in the cryptocurrency native space and real-world financial opportunities by connecting investors, borrowers and money managers.

By bringing asset management on-chain, TrueFi eliminates the middleman and can provide lenders with higher returns on loan funds. , can also provide a series of exclusive financial opportunities for the ultra-rich.

At the same time, TrueFi provides multiple layers of default loss protection to help portfolio managers tap global liquidity and provide borrowers with More capital efficient loans.

This article will explain how TrueFi is reshaping the multi-trillion-dollar global credit market and empowering its token holders With massive financial opportunities.

Introduction

Today, the global lending market is worth nearly $8 trillion, yet nearly all of this money still uses the financial infrastructure established in the 1970s. These technologies (such as SWIFT) often make investments inefficient, expensive and exclusive.

As a result, the most attractive investment options such as corporate bonds, specialty real estate and emerging market opportunities are often out of reach for individual investors.

Blockchain technology provides a new way to transfer and distribute funds, making investments more efficient, faster and transparent. However, blockchain alone cannot solve problems such as assessing a borrower’s creditworthiness, accepting real-world collateral, or collecting defaulted loans.

To solve this problem, the TrueFi team designed a hybrid structure that allows the protocol to Run freely under guidance. Additionally, TrueFi relies on the use of independent portfolio managers who can enjoy the benefits of TrueFi infrastructure while performing centralized underwriting and collections in the real world.

Next, we’ll dive into how TrueFi grew into the first multi-billion dollar credit protocol.

What is TrueFi?

TrueFi uses blockchain infrastructure to launch the first unsecured lending market in DeFi, where borrowers can finally On-chain lending is provided with collateral locked.

This greatly improves borrowers' capital efficiency, causing loan demand to soar. Since TrueFi issued its first unsecured loan to Alameda Research in November 2020, the protocol has originated nearly $2 billion in unsecured loans, has now paid out approximately $40 million to lenders, and remains the industry's largest One of the best underwriting records.

In 2021, TrueFi will no longer simply connect cryptocurrency native borrowers and DeFi lenders, but will begin to provide independent investment A market of financial opportunities managed by portfolio managers, all built on its modern lending infrastructure.

Today, TrueFi offers diverse and growing financial opportunities, including emerging market investing, fintech financing, real estate investing, and gig work Loans, efficiently introducing real-world loans and assets into the DeFi field.

How does TrueFi work?

TrueFi, as a public financial facility, aims to provide infrastructure for lending and asset management. However, when these groups of users come together to utilize TrueFi as a marketplace for their needs, the true magic of the protocol emerges.

Since TrueFi is a decentralized protocol, pledgers of its TRU governance token are also responsible for providing losses to lenders The responsibility to protect, manage the future of the protocol and make necessary contributions to the successful development of TrueFi.

Lender

No matter Whether in the cryptocurrency space or in traditional finance, individual and institutional lenders use TrueFi to match the best risk-adjusted return on their loan funds. Because TrueFi offers such a diverse portfolio (including crypto-native lending and real-world lending) and its loans are collateral-free, the protocol provides lenders with some of the most competitive DeFi profitability opportunities across a vast array of asset types.

To access these profit opportunities, TrueFi lenders simply use the TrueFi app to review the various funds they are eligible to invest in pools and portfolios, and then make allocation decisions based on their own risk and return preferences.

Because TrueFi allows portfolio managers to control the selection of lenders, not all portfolios will be available to every lender, and some Lenders may need to be located outside of restricted jurisdictions or provide proof of identity, a process that can also be completed on TrueFi.

Lenders can typically exit their loan positions at any time through various means. While some portfolios require capital to be locked up for at least a period of time, TrueFi's popular decentralized autonomous organization (DAO) managed pools and automated lines of credit (ALOCs) allow lenders to exit the pool using Liquid Exit for a small fee That’s it, and Liquid Exit will exchange the lender’s loan tokens for unused funds in the pool. Additionally, lenders can also sell their loan tokens on decentralized exchanges (DEX) such as Uniswap.

While defaults are an unavoidable aspect of the credit business, there are ways in which lenders are protected against certain TrueFi portfolios The full impact of the breach.

First, the lender can obtain up to 10% of the value of the pledged TRU, which will be reduced if a default occurs. It will then be used to repay affected lenders.

Second, the TrueFi Investor Protection Fund (SAFU) may use its reserve funds to provide further protection to affected lenders.

Finally, to help lenders still affected, TrueFi may choose to pursue collections on defaulting borrowers to recover liquidable assets.

Borrower

To become a TrueFi borrower, applicants must undergo a rigorous credit reliability review, which reviews off-chain and on-chain data, including company background, assets under management, asset risk, leverage and performance history.

When TrueFi’s credit committee declares that the applicant has good credit, TRU holders will vote to approve or reject their borrowing application. If the applicant's borrowing application is successfully approved, the applicant can obtain a loan from any of TrueFi's permissionless DAO capital pools, with loan interest rates set by the market and informed by the borrower's proprietary TrueFi credit score.

To date, TrueFi has originated more than 130 loans to dozens of borrowers and maintains its position by regularly issuing new loans. Loan book health and activity.

Borrowers rely on TrueFi to obtain funding because the process is very fast and borrowers often receive credit the same day they are approved funds. In addition, since TrueFi’s loans do not require locked funds, each borrower can maximize the efficiency of its funds.

Portfolio Manager

As of 2021 , TrueFi has provided support to independent portfolio managers, and money managers and institutional investors can eventually bring their operations on-chain.

TrueFi provides portfolio managers with the dual advantages of DeFi and institutional financing. TrueFi portfolio managers can tap into global liquidity 24/7 from the day they launch their portfolios, while also enjoying the low costs and high transparency that come with a fully on-chain loan book.

At the same time, these managers enjoy the same features as institutional credit products, that is, they have full control over the selection of lenders (including KYC identity verification requirements) and portfolio and personal loan terms, plus full control over their portfolio strategies, interest rates and fees.

Becoming a TrueFi Portfolio Manager is similar to becoming a TrueFi Borrower and requires community approval before listing their portfolio on the TrueFi app program. However, because TrueFi uses open source infrastructure, portfolio managers can simply use TrueFi smart contracts to launch their own portfolios without going through TrueFi directly.

Today, TrueFi’s portfolio managers use DeFi liquidity to use funds to develop the fintech industry in Latin America and invest in emerging markets and support for cryptocurrency mortgages, all of which provide TrueFi lenders with highly competitive and diversified returns.

Introduction of TRU token

Since TrueFi is a decentralized A lending protocol that relies on input from token holders and contributors to set and achieve primary goals. TrueFi uses a hybrid DAO model that relies on real-world foundations to manage certain off-chain tasks such as tax filings, legal activities, and collection actions. In addition, TrueFi also gives TRU holders primary decision-making power through binding on-chain voting.

TRU stakers are both the front line of TrueFi governance and the front line of preventing defaults. By staking TRU, stakers can formally join the DAO conversation controlled by the token and vote on Snapshot and Tally proposals to formulate the future development path of TrueFi.

How to buy TRU on Binance?

TRU is TrueFi’s native token and can be purchased and traded on the Binance platform. Use this direct link to start signing up and earn TRUs.

What is the development prospect of TrueFi?

To truly tap into the global multi-trillion dollar credit market, TrueFi is taking a two-pronged approach to bridge the gap between DeFi and institutional investors. the gap between.

In the coming year, the protocol plans to achieve deep integration among traditional financial institutions, while continuing to expand DeFi with major DAOs, Integration of other lending protocols and individual DeFi applications.

Improve institutional utilization

To match the control of institutional finance with improvements in the performance of blockchain technology, TrueFi is continuing to improve its protocol and lending products. With the help of large protocol contributors such as Archblock, TrueFi continues to explore the possibility of bringing real institutional asset managers onto the chain while adding liquidity from funds and family offices.

TrueFi’s upcoming features include tranche technology and capital formation periods, the former of which will allow institutional investors to invest in a given portfolio Choose its risk-return profile from among them, which can test market interest in financial opportunities before lending.

In addition, TrueFi will launch improved reporting and provide better tools for lenders and managers through independent contributions from key partners Overview of institutional data.

Deepening DeFi integration

To increase TrueFi’s accessibility in DeFi, the protocol is working on making its loans and investment portfolios compatible with the ERC-4626 standard. The move will allow the two vaults to be integrated with other DeFi opportunities, adding corporate debt and credit products to other DeFi protocols’ product portfolios.

At the same time, TrueFi is openly working with major DAO and protocol partners such as MakerDAO, FRAX, and dYdX, aiming to become a profitable and the preferred partner for DEX liquidity, expected to bring hundreds of millions of dollars to itself in the coming year.