Editors Note: This article comes fromChatting with Xiaozha (ID: xiaonazha88), reprinted by Odaily with authorization.
Editors Note: This article comes from
Chatting with Xiaozha (ID: xiaonazha88)
Chatting with Xiaozha (ID: xiaonazha88)
, reprinted by Odaily with authorization.
Various new DeFi projects have become active again, and the new coins on uniswap have also begun to become restless.
Last weekend, there was a project called TrueFi, whose token was TRU, and it was retweeted by AC, the founder of YFI, as soon as it was launched.
SBF, the founder of FTX, also forwarded the TrueFi project, expressing his excitement.
Of course, many Twitter KOLs reposted TRUs relevant information. The DeFi projects that can get a lot of KOL forwarding are all projects with two brushes.
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1. Background of TrueFi
TrustToken’s first product, TrueUSD, is a stablecoin that can be redeemed for USD at a 1:1 price. Since its launch in March 2018, TrueUSDs market capitalization has grown to over $60 million, with an average daily trading volume of $22 million.
TrustToken completed a strategic financing of US$20 million in 2018. Investors include a16z crypto, BlockTower Capital, Danhua Capital, Signia Venture Partners, Slow Ventures, ZhenFund and other institutions to establish a platform that supports asset tokenization.
If you look at these investment institutions, you will know that TrustToken has a relatively strong background and strength.
So what exactly does TrueFi do?
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2. TrueFi, unsecured lending
TrueFi’s goal is to bring unsecured lending to DeFi, allowing crypto lenders to enjoy attractive and sustainable rates of return, while offering crypto borrowers predictable loan terms without collateral.
All lending and lending activities on TrueFi are completely transparent, and lenders can fully understand the flow of funds participating in borrowers and transactions with TrueFi.
In the DeFi field, there is no permission to enter. The loans in the DeFi field, such as Aave and Comp, are mortgage loans. Aave is also expanding credit lending, but it has not been used yet.
Here comes the question, unsecured loans, who can borrow money?
It is unclear how to review the qualifications of borrowers. In the long run, if TrueFi wants to play well, it needs to establish an automated credit rating and loan system like Alipay.
So what should you do if you dont borrow money and dont pay it back? TrueFi says they have a legal framework to take action on overdue DeFi compatible loans even without collateral, the exact implementation is unclear.
DeFi has mortgage lending, does it still need unsecured lending? In the traditional financial market, unsecured credit lending is a big market. Just look at Alipay’s Ant Lending and Ant Huabei.
As for how to achieve more effective on DeFi, it is not clear.
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1. Lenders: Add TrueUSD to the TrueFi pool for borrowing, earning interest, and mining TRU. Any unspent funds are sent to the Curve protocol to maximize yield.
2. Borrowers: (such as OTC counters, exchanges and other agreements) submit a request to borrow funds from the pool, including information: amount, interest, time period, and Ethereum address. If the request is approved, the loan amount will be obtained.
3. The borrower needs to be approved by TRU Stakers by submitting. TRUStakers vote through the TRU, choose yes or no to the loan request, if the request is approved, the funds will be borrowed from the TrueFi pool. Each vote will expose TRU holders to upside or downside risks depending on whether the loan is ultimately successfully repaid, so TRU Stakers should vote cautiously.
4. Try to repay, the borrower must return the principal and interest before the expiration of the term or in advance. Borrowers who default will face legal action under the signed loan agreement.
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4. The risks of TrueFi and unsecured loans
Unsecured lending has two main risks compared to secured lending:
1. Potentially increased risk of loss
Collateralized lending agreements are protected by this collateral in case of default.
2. Potential liquidity reduction
Instant withdrawals have become the norm in the new agreement, but unsecured loans may not offer the same flexibility of being honored in a timely manner.
Most unsecured loan borrowers are interested in fixed-rate, term loans for predictable repayments. 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 claims on outstanding loans in the form of pool tokens. Lenders who choose to liquidate their loans in this manner should understand that they may incur losses selling their tokens, as these prices will be determined by the market.
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5. TrueFi Token TRU
According to the data on the chain, the total number of TRUs is 1.45 billion.
The distribution of TRU tokens is as shown in the figure below. 28.5% of the tokens were privately raised (the author has not yet found the price of the private placement); 39.0% of the tokens were distributed to the community.
On November 22, TRU launched uniswap, with a fund pool of more than 16,000 ETH. At the time of writing, the fund pool was only more than 12,000 ETH. From the perspective of price, TRU did not perform well, and it also caught many people on Twitter. KOL, after all, the market value is too large.
