V3 arrives with two extremely significant protocol upgrades: the introduction of the TrueFi credit model and the launch of multi-asset support, starting with USDC. These two developments unlock tremendous potential both for TrueFi and for DeFi broadly.
New: TrueFi Credit Model
TrueFi’s credit model represents a new DeFi building block that, while a work in progress today, is on track to develop into one of DeFi’s most trustworthy reference points for borrower creditworthiness, by incorporating both on-chain and off-chain data and being designed for usage across other protocols.
At launch, TrueFi whitelisted borrowers based on a thorough Know Your Business (KYB) workflow and selected for longstanding, respected crypto-native institutions, finally processing loans based on community approval from TRU stakers. The V1 process allowed the likes of Alameda Research, Poloniex, and Wintermute Trading to borrow millions of dollars from TrueFi lenders.
However, to scale to billions of dollars in loans originated, TrueFi V3 relies on input from a credit model that aggregates a number of new factors to produce a TrueFi creditworthiness score from 0 to 255, which will be displayed publicly on borrower profiles (example: Folkvang):
- Company Background, including compliance, legal, accounting, and regulatory health, as well as review of corporate structure
- Repayment History, starting with TrueFi and eventually expanding beyond it
- Operating & Trading History, considering both crypto and traditional finance experience
- Assets Under Management, also considering the types of assets and their custody
- Credit Metrics, including asset coverage, leverage, liquidity and risk exposures
Many elements of this credit model are being used with today’s TrueFi borrowers. With the launch of V3, the TrueFi credit model will play an even larger role in setting the terms of new loans.
The credit model, while still rudimentary today, will continue to improve with the addition of new information sources like centralized exchange data, on-chain history across other protocols, and ongoing growth of theTrueFi protocol.
The grand vision for TrueFi credit is a composable, industry-accepted, decentralized gauge of creditworthiness, pulling in both on-chain and off-chain data while respecting borrower privacy, to bring nuance to crypto finance across protocols.
TrueFi aims to eventually allow nearly any ERC-20 asset to be used to generate a new lending pool, each of which can grow the protocol’s total value locked and net utilization.
The next batch of assets supported by TrueFi in V3 will be stablecoins: USDC & USDT.
Stablecoins enjoy high utility and high demand: they’re both a key DeFi building block responsible for much of the financial activity across various protocols, and also the assets in highest demand by TrueFi borrowers.
The first asset to be added to the TrueFi lending pool will be USD Coin (USDC) around May 20th, 2021, to be followed soon thereafter by Tether (USDT), in June 2021. Each will be the ERC-20 variant.
At launch, each of these assets will enjoy generous TRU incentives for lenders, likely to offer extremely competitive yields for depositors. As single asset pools, lenders are protected from impermanent loss on these pools, though other risks exist.
TrueFi continues to consider other assets for platform support, with DAI, ETH, and BTC currently under review for legal risk and borrower demand.
In anticipation of the upcoming TrueFi V3 launch, the community has voted to increase incentives for lenders and stakers on deposits to the lending pool. At launch, these pools are estimated to offer well in excess of 100% APY on single-asset stablecoin pools.
For 14 days starting May 19th, 2021, lenders to TrueFi’s TUSD or USDC lending pools will enjoy double TRU incentives, while TRU stakers will enjoy an additional 25,000 TRU/day in staking rewards (targeting staking rates of ~50%). This period may be extended by governance vote.
Formal details of the boosted incentives below:
1. Establish tfUSDC farm with daily emissions of 290,934 TRU / day (44.76 TRU per block) for 14 days
2. Increase tfTUSD farm daily emissions 2x from 145,467 to 290,934 TRU / day (44.76 TRU per block) for 14 days
3. Increase stkTRU daily emissions from 100,000 to 125,000 TRU / day (19.23 TRU per block) for 90 days
Timing: Boosted emissions for tfUSDC and tfTUSD above run for 14 days following tfUSDC launch (after 14 days, each pool reverts to 145,467 TRU / day (22.38 TRU per block) unless extended by governance.
These farms are expected to begin on Thursday, May 20th, 2021 at 1 PM Eastern Time / 10 AM Pacific Time.
Following the V3 upgrade, a number of core product, governance, and partnership initiatives are around the corner:
Pending: Lines of Credit & Tradable Loan Tokens
Originally scheduled to launch with V3, lines of credit and tradable loan tokens are still being designed, with substantive updates to come.
Lines of credit will allow borrowers to take out loans with no fixed end term, substantially improving the borrower experience. This feature is still being developed in close partnership with TrueFi’s borrowers.
Tradable loan tokens will create markets for loans from given borrowers and increase TrueFi’s overall liquidity and the utility of the platform’s pool tokens. These assets are currently under close legal scrutiny, and it’s believed tradable loan tokens cannot launch until TrueFi is more decentralized.
Sushiswap TRU/ETH Pool Double Rewards
Following Sushiswap’s MasterChef V2 launch on approximately May 21st, 2021, the TRU/ETH Sushiswap pair will benefit from double rewards: TRU earned via TrueFi’s LP incentives, and SUSHI earned via the Sushiswap Onsen incentives. The pool APY is expected to exceed 100% at launch.
Read on for the original DEX migration proposal here.
TrueFi Backstop (SAFU) Fund
Originally discussed by TRU holders to protect lending pool depositors against default, the SAFU fund is now funded with +5 million TRU and is being integrated into the default response.
A future blog post will detail how the SAFU fund will operate, including how it’ll remain self-funded.
Broad ERC-20 Asset Support
TrueFi V3’s new stablecoin pools are the first step towards broad ERC-20 asset support by TrueFi lending pools.
🤑 Earn: The best way to get started with TrueFi right now is by lending TUSD or USDC to the newly boosted lending pools. Get started by clicking Lend on the Pool page.