Truefi AMA Summary Recap with Shin Chan Community
We held a live AMA with Michael Gasiorek, Head of Marketing of Truefi on 26th April 10:00 PM (UTC+8). Here’s the recap for those who missed it.
Introduction
VK | Shin CHan Group: Before the AMA start, can you please introduce yourselves and the team background?
Michael Gasiorek: Yeah, happy to!
The general TrueFi team has been in crypto since 2016: we started out as TrustToken: https://www.trusttoken.com/
The team raised +$40m from a16z, Blocktower, Founder’s Fund and more — to launch a bunch of stablecoins. You may know us for TUSD, THKD, TGBP, TCAD, TAUD — together amounting to over $400m in circulation!
The team is also fully public, no anonymous devs: https://www.trusttoken.com/about
We decided to launch TrueFi in 2019, as we were trying to grow adoption of our currencies and enter the DeFi market. We built the project combining our expertise in compliance + decentralized tech, and by now, we’ve originated over $100m in unsecured loans + are right about to launch V3 of the project in May!
TRU is trading on Binance, FTX, Poloniex, Uniswap, Sushiswap and lots of other exchanges and we have our biggest update to the protocol scheduled for around May 20th, which we think should be BIG news 🙂
And as for me:
Michael runs all things marketing & comms at TrustToken, makers of TUSD and TrueFi. He’s also the CEO of marketing agency Truth Cartel, owner and editor of Medium’s largest blockchain publication The Crypto, and a host of regular community events in the Bay Area and beyond. Prior to joining TrustToken, Michael was Editor in Chief at Startup Grind and a regular contributor to Inc and Fortune.
You can follow me on Twitter here, that’s where I talk about crypto mostly 😄
AMA Twitter Section Begin:
Q1: TrueUSD is the star currency for TrueFi loans. Is this simply because it is your stablecoin or is there really an additional benefit to using USDT, DAI or USDC?
Michael Gasiorek: Good question: TUSD does have one major benefit vs USDT, DAI, USDC and others = it has *live* attestations, reported on-chain, by Armanino LLP (an accounting firm) and Chainlink, makers of the best oracles in the business.
That makes it more transparent than any other stablecoin. You can see the reporting here: https://real-time-attest.trustexplorer.io/trusttoken
That said, all those other stablecoins *are* coming to TrueFi in V3: we’ll soon be adding USDC, and the other two stablecoins will follow soon thereafter.
The reason we’re adding so many stablecoins is because that’s what borrowers want to borrow, and are willing to offer the best rate on. Fewer borrowers want, say, ETH or BTC — meaning you can’t get rates as high as we’re getting on TUSD or will soon get on USDC/DAI/USDT
Watch for USDC on TrueFi in May 🙂
Q2: TrustToken is launching TrueFi, the protocol for unsecured loans, powered by the TRU token. Who is in charge of paying off the loans, the lenders, the borrowers or the trueFi platform? What are the withdrawal alternatives applied by TrueFi?
Michael Gasiorek: So, of course, the folks who RECEIVE the loan must also REPAY the loan = borrowers!
Our borrowers are some of the best busineses in crypto: Alameda Research (SBF’s company), Wintermute Trading, Poloniex, Folkvang, and many others. They’re *only* institutional businesses right now, because TrueFi has a very demanding approval process (it’s not for retail borrowers like you and me yet).
These borrowers have collectively borrowed +$100m in unsecured (ie no collateral necessary) loans since November 2021, and have 100% payback history — no defaults!
Finally, as a lender, if you want to take your money out of the protocol (especially if the money is loaned out with someone at the time), it’s no probem: using something we built called Liquid Exit, you can remove your TUSD with very low slippage anytime, even if the loan isn’t finished.
And here you can see some of the active Borrowers:
The repayment is done by the folks whose name is under “Borrower” — and you can click it to see their entire lending history on TrueFi. It’s the early days of our credit model 🙂
Q3: In an effort to prevent loan default, the core team and $TRU holders work hard to select the most reputable borrowers. What are the measures you have developed to prevent such loans from defaulting? Can the community have a voice in these types of decisions?
Michael Gasiorek: Such a good question! The process and the community are both *super* important to making TrueFi work. Let me explain:
There are three steps to getting a loan processed, as a *borrower* on TrueFi:
1. Apply to become a Borrower, which is a fairly demanding process, requiring you to (a) have a business incorporated, (b) submit lots of documentation about your business and investments, © undergo a credit check by the TrueFi credit team, and (d) get a thumbs up from the community.
2. Once you complete the process with TrueFi, you have to now be approved by TRU holders, who vote to approve new borrowers. You can see some of those requests right here on our Forum: https://forum.truefi.io/c/borrower-requests/5
3. Finally, once you’ve been whitelisted by the protocol AND approved by the community of TRU holders, who vote on the forum, THEN your individual loans have to be approved based on size, timeline, and a few other factors.
We know it’s a fairly long process, and right now limited to only the best borrowers in the entire industry, but based on how popular the platform is becoming, it seems borrowers REALLY like the loans we offer and are ok to do all the work to get approved, including becoming active memebers of our community.
In the future, we expect to be able to offer loans to some retail users, as well as protcols themselves.
Now, finally, what happens in the case of default?
- There’s some liquidation of TRU to cover any immediate losses by lenders.
- There is a legal action taken against the borrower to recover funds — they are NOT anonymous, and they sign a legal agreement in case of default.
- If money is collected, it’s distributed back to anyone who suffered losses as a lender.
We wrote a loooooong blog post on it here, that goes into lots of detail: https://blog.trusttoken.com/mitigating-risk-truefis-loan-default-process-454359a8c4b
Q4: How does the prediction market work? Is it possible to place bets on the market through the same main wallet? Explain how unsecured loans work? How does it benefit each of the parties involved?
Michael Gasiorek: Thanks for the question! It’s an interesting one, because the process for approving loans has already changed a bit, and is developing even further with the launch of our Credit model
Back in V1, you could use TRU to bet on (a) will this loan be approved or not, and (b) will this loan be repaid or not.
If you voted correctly, you’d get extra TRU. If you voted wrong, you’d lose some TRU.
This is no longer the case in V2, which doesn’t require users to vote on individual loans — the protocol approves loans automatically from approved lenders.
In V3, it’s going to get even more sophisticated: a credit model (which is transparent and can be affected by TRU holders through governance) will actualy decide the loans that go out.
That’s all you need to know about the predicton market: in short, it’s a system we used in V1 and is slowly being factored out in favor of a credit model, which will be one of the first in DeFi!
Now, what’s so special about unsecured loans: they don’t demand locked up collateral, meaning your loan is based on your reputation, not your assets!
This is one of the first ever systems in crypto to do unsecured lending, partly because it’s HARD to figure out HOW to get borrowers to pay back their loans.
However, whichever projects can figure this problem out, stands to take a BIG bit of the multi-TRILLION dollar indistry of unsecured lending, like credit cards, in the traditional finance world.
What we’re doing in starting with these risky loans to the BEST, most respected busineses in the space. Then, we’re builidng a credit model to allow us to scale new borrowers and loans. Then, we’re going to bring these loans to all 🙂
We KNOW there’s very high demand based on how many borrowers are applying AND based on the very high rates we’re getting — so now the challenge is scaling.
But if we can figure this out? Well, it may make TrueFi the next AAVE or Compound: a CORE piece of DeFi infrastructure.
Q5: I understand that you initially started out as TrusToken, from which you have developed other related products. Can you give us a brief explanation of each of those products and the reasoning behind them?
Michael Gasiorek: Yeah, for sure, great question. Basically, think of our work like this — I hope it’s not TOO confusing:
TrustToken is the main business. We operate a stablecoin business + contribute to DeFi.
TrustToken has built and operates 5 stablecoins (TUSD, TGBP, THKD, TCAD, TAUD) + 1 gold-backed token TGOLD. These are used in +100 countries by +120 partners (like exchanges, funds, etc).
TrustToken is also the core dev team behind TrueFi, which is a decentralized project that we don’t own — just contribute to. TrueFi is an on-chain credit protocol for collateral-free lending. This is used by dozens of Borrowers and hundreds of Lenders like you and me.
Telegram Live AMA Begin:
Q6: What is the approximate date when you think that TrueFi will stop being a beta and will be ready? Where can we stay on top of all the updates and news about TrueFi?
Michael Gasiorek: We’re ready for you now, though it’s a beta because we’re always improving! Visit Truefi.io to start using the product as a lender or staker, and follow us on Twitter + join Discord for the latest news.
Product: https://app.truefi.io
Twitter: https://twitter.com/trusttoken
Discord: https://bit.ly/chattruefi
Q7: Upon what PROTOCOI are TrueFi PRIVACY buiIt and can you ask me why do you think it’s the best?
Michael Gasiorek: TrueFi is built on Ethereum — because that’s frankly where ALL of DeFi is happening. It’s got some gas fee issues, true, but we’re optimistic about scaling.
We’re exploring opportunities on Binance Smart Chain, Avalanche, Polkadot, and others, though 🙂
Q8: Let’s imagine that the borrower is still unable to repay the loan and the court proceedings take a very long time, how will the losses be reimbursed to the creditors? Do you have a special fund (SAFU) to cover losses?
Michael Gasiorek: Yes, we’ve got a SAFU fund being designed right now! If you have ideas for it, you can contribute here: https://forum.truefi.io/t/ideas-designing-the-truefi-backstop-fund/383
Q9: The big problem with loans is defaulters, but I could read that TrueFi has established a legal framework to enforce actions against delinquent loans compatible with DeFi, right? is she a guarantee for the lenders? Could you explain us how it works?
Michael Gasiorek: Great question. Yes, TrueFi borrowers sign a legal agreement before they can take money, promising repayment and accepting litigation if they default. It’s enforcable around the world, using California jurisdiction, and is likely to earn back at least some of the loan.
That said, even if the loan defaults, lenders will be protected by (a) TRU liquidations to cover losses, and (b) the SAFU fund to cover some of the losses.
If the money is collected, it’ll be put right back into the hands of those affected.
Q10: many new users who do not understand how to operate your project, do you provide a website to provide tutorials for running your project?
Michael Gasiorek: Yep, we have LOTS of tutorials:
A: What is TrueFi: https://bit.ly/truefiblog
B: FAQ: https://docs.truefi.io/faq/
C: Videos guiding you on how to use it: https://www.youtube.com/watch?v=SctLiJqNqtw&list=PLHCf8xWF4_GCvZfPVuSiD72N-RaORqoGD
Q11: Can you list the most important features of $ TRU that put it ahead of other competitors? What is your competitive advantage that you trust most in your project?
Michael Gasiorek: Another good question — how do we compete?
A: No one else is actually offering uncollateralized loans. We’re the first, and we’re $100m ahead of everyone so far 😛
B. We are developing a credit model that can be used across other protcols. I expect that will be a VERY important piece of DeFi infrastructure.
C. We have some of the best borroweres in the business — they trust us and have a good relationship with us
D. We have a VERY experienced, transparent team that’s long-term committed to the platform.
Q12: Partnership is like a supplement where the combined effect is beyond the individual level. Can u name some of ur recent partners that can help TrueFi? Is there any partnership that will take place in the near future?Can u tell us with whom?
Michael Gasiorek: Partnerships! Of course 🙂
We’re already very close with many big exchanges like Binance, Poloniex, FTX and others — $TRU is trading there NOW! We’re also very close to all our Borowers, like Alameda Research, Folkvang, Wintermute and others — they’re big supporters of ours, especially on Twitter + Telegram.
Technically speaking, we’re also well integrated with Uniswap and Sushiswap, and even have an AMA planned on Friday with Sushshiswap to announce a new partnership! We’re also connected deeply into Chainlink ecosystem, for TRU price oracles, and Armanino, for TRU treasury audits.
Right now we’re working on a bunch of other new partnerships: Pancakeswap (with liquidity rewards), Bancor, and a few very special ones I can’t share yet.
Q13: It says in your intermediate article that TrueFi is actively following a progressive decentralization path that puts control in the hands of the community. Can you tell us how your governance system works? Who can participate and make decisions?
Michael Gasiorek: Decentralization! Very important question. To keep it brief:
A. TrueFi is already using forum + Snapshot votes to make important decisions
B. By end of May, we’ll relinquish control of the smart contract keys, officially and irrevocably decentralizing the platform
C. Finally, TRU holders can ALREADY suggest changes and vote on major issues, like token burns or SAFU fund, today — as well as on new loans/borrowers.
Q14: Can you do online monitoring of the most important ecosystem indicators? For example the number of connected Internet sites, the total number of burned tokens, the number of users per day, etc.
Michael Gasiorek:
Analytics! Good questions.
We’re tracking a LOT of elements, but these are the most important: Total Value Locked (lending pool + staked TRU), total value of originated loans (just hit $100m last week), total wallets holding TRU, total wallets holding tfTUSD
We’re also tracking other small elements, like size of our communitiy on Discord, site visits, and more.
We track many of these analytics publicly here, on Dune: https://duneanalytics.com/tt_tyler/truefi-loan-stats
Q15: Do users have to kyc first so that users can operate your project with priority?
Michael Gasiorek: KYC
ONLY the Borrowers have to KYC — anyone can become a lender (right now, using TUSD, but eventually many other tokens too) or staker (so long as you hold TRU).
If you can get your hands on TUSD or TRU, that’s all you need to use TrueFi today — with no KYC requirement.
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