TrueFi is a Ethereum DeFi credit protocol that facilitates uncollateralized loans. It offers fixed-term, zero collateral (unsecured) loans to vetted institutional borrowers. The loans are powered by on-chain credit scores and the protocol is governed by holders of the TRU token. The goal of TrueFi is to bring uncollateralized lending to DeFi. This helps cryptocurrency lenders enjoy attractive, sustainable rates of return, while giving cryptocurrency borrowers predictable loan terms without requiring collateral. Importantly, all lending and borrowing activity on TrueFi is fully transparent, allowing lenders to fully understand participating borrowers and flows of funds engaging with TrueFi.
Lenders add TrueUSD into a TrueFi pool to be used for lending, earning interest and farming TRU. Any unused capital is sent into the Curve protocol to maximize earnings. Borrowers (like OTC desks, exchanges, and other protocols) submit proposals to borrow capital from the pool. They submit the amount of capital they want, the % APY they’re offering, the term, and the Ethereum address that will receive the loan capital if the proposal is approved.
Borrowers borrow funds from the TrueFi Pool by submitting requests subject to approval by TRU Stakers vote on these proposals by staking their TRU on their choice of “Yes” or “No” for individual loans. Each vote exposes participating TRU holders to upside or downside based on if the loan ends up being successfully repaid, and so TRU Stakers are incentivized to vote carefully. In TrueFi V2 and V3, these decisions will be increasingly made by a credit model. The Pool smart contract approves or rejects the loan based on the Pool’s risk parameters and Yes/No votes by TRU Stakers. The Borrower must return the principal and interest on or before the term expires. Delinquent borrowers will face legal action pursuant to the loan agreement signed