In light of the Blockwater default, coupled with the confidential credit review process (see quote below), It is in the best interest of TrueFi Lenders and DAO members to have access to borrower profiles (financials, use of funds, covenants) and the default restructuring process (loan amendments, extensions, process updates). Also, shouldn’t stkTRU holders have more information about potential borrowers beyond a name and website link?
I propose that we amend this process and allow stkTRU holders to have gating access to more detailed borrower information and updates on default / restructuring processes.
“All information provided by the borrower for the purpose of this credit review remains strictly confidential and in the sole possession of TrustToken.”
@ProfessorDegen It’s a great suggestion and one that has been come up several times since the protocol’s launch. The issue unfortunately is that the borrowers want to know precisely who they are facing with confidential information and given the level of detail they provide to us it’s a fair position. I believe our DAO team is seeking volunteer community members to be more active in the overall diligence process with respect to funds deployed from the founding stablecoin pools. Given your deep experience, I would suggest reaching out to them and getting involved! Thanks.
I agree to an extent. It’s time to grant DAO members more oversight of TrueFi’s core operations.
With that being said, and as mentioned by @RDharia, borrowers don’t want everyone to have access to their confidential information. Everyone having access could hurt our borrowers.
Perhaps we could define strict criteria for granting DAO members access to such confidential information. Criteria such as minimum TRU staked for a minimum duration, performing KYC/KYB, and having doxed addresses.
All fair points. Thanks @RDharia.
What if we focus in on the restructuring process, i.e. Blackwater default. Instead of disclosing confidential information of ALL borrowers, we just improve the transparency of defaulted and/or non-accrual borrowers.
This is more consistent with the TradFi process of public disclosure of bankruptcies. Look no further than Celsius, 3AC, Voyager.
If not made completely public, token holders should have gated access to details, updates and contemplated agreements.
As a recovering banker at Bank of America, such improvements will make TrueFi better positioned for global adoption. LFG!
Very valid points. The confidentiality provision in our credit agreement would need to be amended to divulge borrower information prior to a court supervised administrative proceeding. We have made some notes here and definitely worth considering as we approaching forthcoming updates to our DAO pools. Thanks very much!
Just to follow up with this quote;
"All information provided by the borrower for the purpose of this credit review remains strictly confidential and in the sole possession of TrustToken.”
When defining a strict criteria for granting lenders access to borrowers confidential information.
This could be part of the borrowers loan agreement…?
Checking certain pre defined boxes set by TrustToken on what “confidential information” the borrower’s themselves are willing to disclose (make transparent) to Lenders.
Lenders can then see, what has, or has not been checkmarked as “willing to be disclosed” (made transparent) to them once loan is approved. This will build trust between borrowers and “potential” lenders.
Use of funds UNDISCLOSED
The actual information can only be viewed by the lenders once loan is approved. If they are not happy with what they see, maybe a 48hr cooling off period can be offered to lenders. Any lenders who choose to use the cooling off period can pay a small TRU processing fee. Those lender/s will need to be replaced with other lender/s.
This ensures confidentiality between the borrowers and the lenders pre loan approval and after loan approval. By not disclossing the pre defined confidential information at reviewing stage ensures the information is only shared between borrowers and the final lenders.
This way, an informed decision can be made based on the pre defined criteria that has been set and agreed to regarding what “confidential information” is disclosed, if any at all.
One determination that will need to be made, is what predfined critea will be sufficient for all parties involved without needing court proceeding. And im sure its no so straightforward as this
This potentially can also be used as a live testing phase to see what borrowers choose to disclose and not to disclose. Results can set the stage for future actions that need to be taken.