TrueFi is an unsecured lending DeFi protocol launched by TrustToken.

Project Vision:

Bringing unsecured lending to DeFi. This helps crypto lenders enjoy attractive and sustainable rates of return while providing crypto borrowers with predictable loan terms without collateral.

Market needs:

The explosive growth of DeFi has brought a new asset class with huge demand on the blockchain: debt. But there is a lack of a vehicle on the market that provides high returns at consistent and predictable rates, with manageable risk, and access to unsecured loans.

Solution:

1. A legal framework that can take action on DeFi-compatible overdue loans even without collateral;
2. Long-standing reputation for trustworthiness among retail and institutional users (TrustToken releases stablecoin TUSD And the accumulated user volume), thus guiding a group of high-quality borrowers and lenders;
3. The stable currency supported by global legal system can easily access TrueFi.

Operation process:

1. Lenders add TrueUSD to TrueFi pools for lending, earning interest, and mining TRU. Any unspent funds are sent to the Curve protocol to maximize yield.
2. The borrower submits a request to borrow funds from the pool. [They submit the amount of capital required, the APY percentage offered, the term, and an Ethereum address (if the proposal is approved) to receive the loan capital. 】
3. The borrower submits loan requests to obtain votes from TRU pledgers on these requests. Each vote exposes participating TRU holders to upside or downside risks depending on whether the loan is ultimately successfully repaid, reminding TRU stakers to vote cautiously.
4. The pool smart contract approves or rejects the loan based on the pool's risk parameters and the (yes/no) votes of the TRU pledgers.
5. The borrower must return the principal and interest on or before the expiration of the term. Borrowers who default will face legal action under the signed loan agreement.

Token usage scenario:

TRU is used as a governance token for loan pledge and voting.

Project assignment:

9.5% Company
39% Incentive Allocation
28.5% Private Equity
18.5% Team and Management
4.5% Future Team

Project risk:

1. Potentially increased risk of loss: Protocols that require collateral are protected by that collateral in case of default. While this would allow such platforms to indiscriminately approve loans, borrowers of unsecured loans must meet higher standards of trust. In the event of a default on an unsecured loan, the creditworthiness of the bad lender is assessed before the next loan disbursement and faces reputational damage and legal action. If such legal action is unsuccessful in collecting the loan, the lender may lose some or all of the loan's value.
2. Potentially reduced liquidity: While instant withdrawals have become the norm with new agreements, unsecured loans may not offer the same flexibility. Most unsecured loan borrowers are interested in fixed-rate, term loans with predictable repayments on schedule. That means lenders funding such loans need to feel comfortable locking up assets for the life of the loan, which can last weeks or months. TrueFi offers another option for instant withdrawals: the ability to sell your claim on outstanding loans in the form of liquidity pool tokens. Lenders who choose to liquidate their loans in this manner should understand that they may incur losses selling tokens, as these prices will be determined by the market.

Value Judgments:

TRU currently only has a governance role and is a governance token. All tokens generated by the project party within 6 months after the start of liquidity mining will be used for destruction or to give back to the community.

In the short term, according to the governance plan, the supply of TRU will be reduced, thereby stabilizing its price support.

In the long run, TRU is just needed for the operation of the TrustToken platform, and the scale of asset on-chain will affect the value of TRU, so the actual scale of future asset on-chain needs to be considered.

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