TrueFi (TRU) is a DeFi (decentralized finance) protocol geared towards the peer-to-peer lending market. The platform is unique for many reasons including that it’s among the first to offer on-chain, credit-based, uncollateralized lending. The network combines permissionless lending pools, multiple tokens, and a unique blockchain credit system to accomplish this task. As such, TrueFi has proven to be ideal for use by institutions and enterprise-level clientele.
What Problems Does TrueFi (TRU) Attempt to Fix?
There are a variety of problems that TrueFi helps to reduce or completely eliminate through its approach. One of the primary problems faced by both lenders and borrowers is centralization. Whenever you have centralization, the market is ripe for abuse. Currently, large lending platforms set the rates for the market.
TrueFi (TRU) – Twitter
The sheer size of these firms and the need to integrate so many third-party verification systems due to the use of fiat currency, make borrowing funds very expensive. It also means that there’s no way for the average person to gain profits by lending out their funds via these groups. TrueFi’s decentralized technical structure improves the lending process considerably by removing middlemen and gatekeepers.
Collateralization- Requirements
One of the most problematic scenarios for DeFi lending protocol users is the collateralization requirements. Since most of these protocols integrate the use of lending pools and no credit checks, they require users to over-collateralize loans. This necessity locks up funds that could go towards other profit streams. TrueFi changes the game with its no collateral requirements for creditworthy borrowers. Borrowers can submit their applications and get their business or organization whitelisted. Once you’re whitelisted, you have access to the loan marketplace.
Gatekeepers
Anyone who has tried to get a loan from their local bank branch understands that it’s much more than your credit that determines if your request gets approved. In many instances, the loan agent has complete veto power over your loan status. They can determine if you “deserve” the loan based on anything from how you intend to spend the funding, to your history, or your attitude.
TrueFi eliminates a majority of the gatekeepers leaving only your credit as the determining factor to your loan’s approval. The system provides the market with an open lending marketplace. Here you can shop through the lending options to find the perfect loan to meet your needs. Notably, the developers have streamlined the lending approval process to four easy steps.
Payment Delays
Another major problem that borrowers contend with is lending delays. You may get approved for funding, but it could take a week or longer for your loan to issue when discussing centralized options. Larger loans can take months to get approved. These delays can mean that valuable funding doesn’t get where it needs to go in time. TrueFi provides consistent loan issuance with an average of 7-days between applications to loan approval.
TrueFi (TRU) – Homepage
Benefits of TrueFi (TRU)
There are multiple benefits that TrueFi introduces to the market. For one, the system effectively combines P2P lending with advanced DeFi capabilities including high yield farming and staking protocols. These options enable anyone to enter the ecosystem and generate wealth in a secure manner. It also provides the market with an open lending protocol that is both fast and scalable.
Lender Protections
Another reason why TrueFi continues to gain in popularity is its unique lender protection mechanisms. The lending protocol enables users to lend their stablecoins to the TrueFi lending pools that use predefined strategies to determine creditworthy borrowers. In return for their efforts, the lenders receive rewards that they can also lend out to generate more ROIs.
On-Chain Credit Scores
TrueFi introduces on-chain credit scores to further improve the borrower and lending experience. Borrowers can maximize capital efficiency and build on-chain credit history using this system. Any organization with substantial credit can develop a borrower profile and showcase their stellar repayment history which improves their access to funding in the future.
Profits
TrueFi (TRU) keeps in line with the DeFi movement with its high yields. Users can secure high-yield rewards on their stablecoin loans securely. The protocol employs a liquidation procedure to ensure the lending pools remain solvent and lenders receive their repayment in a timely manner.
Low Rates
Borrowers also save on lending rates compared to centralized alternatives. The system leverages market-driven interest rates on unsecured debt as part of this approach. Additionally, all interest rates remain locked in for the duration of the loan.
Privacy
Those who are seeking more anonymity in the lending process will be happy to learn about TrueFi’s features. The network offers publicly-anonymous borrow applications that leverage zero-knowledge proofs. Zero-knowledge proofs enable networks to conduct transactions without revealing any vital information about the wallet conducting the transactions.
How Does TrueFi (TRU) Work
TrueFi integrates a decentralized network of lenders and borrowers. The system integrates the Proof-of-Reserve consensus mechanism to improve transparency for all parties and remain valid. The system also enables advanced user features such as the ability to conduct real-time audits of the protocol.
Farming
Users can secure high yields leveraging the farming features provided by TrueFi. Farming enables you to earn interest rates by providing liquidity to a network smart contract. The APY rates change for farming pools which can lead to higher ROIs in certain conditions.
Staking
You can also stake TRU to secure passive rewards. Staking is another low-risk DeFi feature that enables you to profit without giving up ownership of your digital assets. The main difference between staking and farming is that staking requires you to lock your tokens up for a pre-set time. As such, its APY remains constant, making it ideal for those seeking consistent returns.
TRU – CoinGecko
TRU
TRU is the main utility token for the TrueFi project. The token is an ERC-20 standard asset that lives on the Ethereum blockchain. You must hold TRU to conduct lending activities, pay fees, and participate in any of the farming or staking features provided by TrueFi.
Loan Tokens
Borrowers can select how they want to receive their loan from a variety of stablecoin options. These loan tokens operate as non-tradable ERC-20 tokens. Their goal is to show the lender’s proportional representation in loans issued from the Lending Pool. Notably, the system creates a unique loan token used to track the present value of each loan every time.
TrueFi (TRU) – Peer-to-Peer Lending for Enterprise-Level Clientele
TrueFi (TRU) represents a shift by developers from servicing the average DeFi user to positioning for institutional investment firms. The protocol enables these firms to access funding in a way that provides them with more flexibility. Additionally, the integration of an on-chain credit system could lead to TrueFi serving a vital role in other protocols in the future. As such, TrueFi appears to be well-positioned moving forward.
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