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About TrueFi (TRU)
TrueFi is a type of decentralized finance (DeFi) protocol facilitating uncollateralized loans.
Most DeFi protocols focus on overcollateralized lending. TrueFi offers fixed-term, zero collateral (unsecured) loans to vetted institutional borrowers, Messari explained.
TRU token holders govern the protocol. Loans are powered by on-chain credit scores.
"Lenders can borrow cryptos with predictable loan rates without the need to pledge collateral," CoinGecko said.
Eventually, TrueFi aims to become a market-driven, completely automated credit rating and lending system that transcends traditional lending norms/constraints while requiring increased levels of responsibility from users, especially for onboarding new borrowers. TrueFi borrowers complete a thorough onboarding, earn community approval and sign an enforceable loan agreement.
In lieu of pledged assets, CoinDesk said, TrueFi bases lending decisions on credit scores derived from on-chain and off-chain data.
Some holders stake their TRU tokens and assess their creditworthiness of borrowers, Stockhead said. Those who are deemed worthy are able to borrow TrueUSD, TrustToken’s stablecoin; if the borrower repays the money, the stakers who vouched for them are rewarded with more TRU tokens.
Since November 2020, the protocol has originated over $200 million in loans and paid out $1.7 million to lenders, without any defaults, according to CoinDesk.
Who created TRU?
TRU was created by TrustToken, a San Francisco-based company on a mission to make financial opportunities more accessible. The company was co-founded and continues to be led by Rafael Cosman who studied artificial intelligence and cryptography at Stanford University. Cosman previously worked at Palantir and Google Brain.
When was TRU created and how much was it worth?
TrustToken launched in 2017 and rolled out its first product, stablecoin TrueUSD (TUSD), in 2018. Two years later, in November of 2020, TrustToken launched TrueFi and the native asset TRU which remained at between $0.12 and $0.50 for most of its early days of trading in light volume. TrustToken, meanwhile, several months later raised $12.5 million in a private sale of TRU tokens to a trio of large backers, BlockTower Capital, Andreessen Horowitz and Alameda Research, CoinDesk said. Around that time, the summer of 2021, TRU began to spike, climbing to an all-time above $1.
How is the price of TRU determined?
TRU has a maximum supply of 1.4 billion, CoinGecko said.
The TrueFi team has been actively burning TRU tokens (reducing supply) as they unlock, while allocating to a community treasury, CoinBureau said.
TrueFi’s objectives include improving the tokenomics and interest rate model to better support lines of credit, increasing demand. The market for DeFi governance tokens has been volatile as the macro conditions have generally created a risk-off environment especially in the early part of 2022. DeFi is a crowded field and known for high risks.
Why does TRU have value?
For starters, TrueFi has in excess of $1 billion worth of Total Value Locked (TVL). Additionally, it is considered among the foremost promising protocols for uncollateralized lending which could be a game changer in years to come as the exclusivity of centralized finance continues to experience disruption. Growth in TVL and token price appreciation will hinge on expanding the set of borrowers, types of loans and the efficiency of the automated credit prediction market, CoinGecko said.
Single borrower pools, credit monitoring and on-chain automation were important features introduced in 2022. CoinBureau said that token emissions will gradually decrease as the protocol transitions to a stable fee-based structure, which could help put upward pressure on the asset price.
What are the benefits of TRU?
- TrueFi’s on-chain credit scores will be beneficial “for lenders to assess where they want to put their capital,” said Blake Richardson, an investor at BlockTower, per CoinDesk.
- TrueFi has the potential to become the foundation of uncollateralized on-chain lending across DeFi, its CEO told TechRound. "This will grant TrueFi participants access to a larger, more diverse set of borrowers and lenders, more staking opportunities, and more opportunities to exercise governance rights," he said.
- TrueFi has a strong team, an innovative product in a big market and great, long-term backers, one crypto pundit said.
- If a huge institution, say JP Morgan, asked you to give them a loan, you would and it kind of makes sense to do so – because it’s JP Morgan, and you know you’ll get paid back, and so that is kind of like what is at play here, as one analyst in Australia has explained.
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