TrueFi enables users to earn high yields on stablecoin loans and institutions to borrow capital without collateral.

Undercollateralized Lending

TrueFi

Protocol Code Quality

Protocol Maturity

Protocol Design

Risk Rating

Watch Out

* [Documentation](https://docs.truefi.io/faq/) 
 * Auditors 
 	* [CertiK, SlowMist and Solidified](https://github.com/trusttoken/audits) 
 	* [Audits](https://github.com/trusttoken/audits/tree/master/TrueFi) 
 * Please see our [FAQ on experienced auditors](https://help.exponential.fi/en/articles/6381015-what-are-experienced-auditors)

Exploit/Hacks

green

None

* [Website](https://app.truefi.io/home)  
 * Token: TRU  
 * Tags: Undercollateralized Lending

Info

* TVL: $3.8M (Rank #137)  
 * TVL Ranking by Undercollateralized Lending: #0  
 * Blockchain: Ethereum  
 * Chain TVL  
 	* Ethereum: $3.83M

Key Metrics

Information


- Code reviewed by several experienced auditors including [CertiK, SlowMist and Solidified](https://github.com/trusttoken/audits)
- Public team promotes accountability
- No documented protocol hacks since launch
- Robust controls to mitigate oracle price manipulation


- Core protocol launched in 2020; maturity over 18 months reduces technical risk as smart contracts are sufficiently battle-tested
- Top 5% by total value locked reduces risk
- Decentralized governance increases transparency
- At least one critical governance issue documented


- Protocol could be susceptible to negative feedback loops
- Unsecured lending market with basic investor protection mechanisms to recoup debt repayments in the event of default

Risk Assessment

TrueFi lenders can earn highly attractive interest rates for supplying liquidity to an institution's borrower pool.

What we like

Only whitelisted institutions can borrow unsecured loans on the platform and there are limited default protection mechanisms in place. These institutions borrow without depositing any collateral, which leaves minimal protection for lenders in the event of default.

What we like less

Offers you some of the highest yields on stablecoins across DeFi lending platforms, albeit with the added risk of no collateral backing.

What it means for you

Summary

#### How TrueFi works
TrueFi is a lending platform that provides uncollateralized loans to institutions. The TrueFi ecosystem has five key users: lenders, borrowers, TRU stakers, the TrustToken team, and portfolio managers. Borrowers are typically institutions that must go through an onboarding process, have at least $10M in unencumbered assets, and have good on-chain credit scores as determined by the team. Lenders provide liquidity to a pool and receive tfTokens in return that represent a receipt of their underlying deposit plus accrued interest. Any unused capital in the pool will be deployed to third-party lending protocols like Aave and Compound. TRU holders can stake their assets to provide first-loss capital to lenders as they are the first ones to be liquidated in case of default. In exchange, TRU stakers earn protocol fees (paid in tfTokens) and TRU rewards. TrueTrading is the team managing the DAO lending pools and is responsible for performing credit analysis on borrowers, as well as pursuing legal action if a borrower defaults. TrueFi also relies on its SAFU (Secure Asset Fund for Users) mechanism to automate the default process. SAFU was initially funded by the TrustToken team and is in charge of dealing with all bad debt accumulated by the protocol. When the SAFU smart contract is triggered, it will reduce the staked TRU tokens by up to 10% of the default amount. If the slashed tokens' value is insufficient to cover the default, the SAFE will use its funds to help repay the affected lending pool for lost funds. Lenders are at risk if the SAFU value is insufficient to cover the remaining default amount.
#### How TrueFi makes money
Lenders in DAO pools incur no fees for depositing funds. However, lenders must pay an exit fee in order to instantly withdraw liquidity from the pool. This fee is calculated dynamically based on the pool utilization rate (proportion of the pool idle vs. lent out to borrowers). Lenders in portfolios pay a standard protocol fee of 50bps per year to the TrueFi DAO treasury. Moreover, portfolio managers can set optional portfolio fees that can be accrued linearly over time, paid at deposit, or paid at withdrawal.
#### How you make money on TrueFi
You earn lending fees on TrueFi by depositing your assets to be used by institutional borrowers in either the DAO pools or Capital Markets. TrueFi further enhances its yield by offering its native TRU token as an additional incentive. TRU stakers (stkTRU) can also earn protocol fees and additional TRU rewards, albeit at the risk of losing their staked amount in the event of default in DAO pools.
#### Additional resources
Replay our [Twitter Spaces with TrueFi](https://open.spotify.com/show/6zgvva9rrNyPUQH6453TI6)

Learn more about [how we evaluate DeFi lenders](https://twitter.com/ExponentialDeFi/status/1579972466801143808)