One of the top priorities right now is to increase utilization in the pools. We are doing this by (1) growing with existing borrowers (2) continuing to bring on new borrowers (3) Getting rates in line with the market
Regarding (2), I propose that we discontinue TRU incentives for borrowers and use the remainder of that allocation pool to create a referral program for existing borrowers to bring on new borrowers.
Why do this?
We introduced the ‘borrower incentives’ as a way to subsidize rates. However, with the introduction of the ‘rate model’ we are seeing lower base rates on average and the ‘borrower incentives’ are now overkill. We will still pay out the incentives to the borrowers who took out a loan between when the original Snapshot passed and now, but no more.
Existing borrowers have been the best source of new borrowers. Many of our repeat borrowers today come from introductions or recommendations from earlier borrowers. We’d like to give borrowers even more of a reason to incentive new TrueFi borrowers.
Details of the Referral Program(to be fleshed out based on comments before formal proposal moves to Snapshot)
Let’s say we have about 900,000 / 1,000,000 of the TRU that were previously allocated towards
It would be great if we could bring on another 20 credible borrowers
I propose that we pay 45,000 TRU to each borrower that refers a new borrower to us that passed our review process and takes out a loan
If this program is effective, we could choose to extend it, but I think 20 is a great starting point.
At the moment, we have a CRM w/ 56 existing and potential borrowers at varying stages of onboarding. These 56 borrowers include borrowers who have already taken out loans (Wintermute, Nibbio, Amber) and some that we plan to reach out to, but have not yet (often because they’re large and we we want to grow a bit before we connect with them). While we can’t share that list publicly, we’ll do ‘scouts honor’ with borrowers so that if they introduce us to someone that (a) we have never spoke to (b) have on the list, but aren’t actively onboarding with, we will pay out the referral.
Thoughts?
Should we do this?
Yes - Move forward with a proposal
No - I do not like this idea
Yes, but make changes - (Comment suggestions below)
I fully support a referral program for borrowers… its actually something i suggested lately, without much detail…
My only fear is that an incentive program solely based on TRU incentives might not be enough to trigger interest… what about the idea to take a slice out (circa 1%) of the new borrowers interests they are bringing for say their first 3-5 loans and reward it to the one bringing the business?
With this, not only you give an additional, more predictable reward, but you also incentivize them to push the new borrowers to take out new loans after their first one.
Also, why limit this program to existing borrowers? we may have people with connections among our community members who maybe would be happy to reach out to potential borrowers?
Too much overhead. Would require changes to the smart contracts presumably since the interest is all coded into and paid directly to the smart contracts.
I think our borrowers are the highest signal group right now and they’re not naturally incentivized to add more borrowers to the pool (although this isn’t strictly true, they might see it as competition for a fixed amount of capital). On the other hand, presumbly everyone in our community owns TRU and is already incnetivized to bring on new borrowers.
I think if this initial program w/ borrowers works, we could consider expanding to a wider group of people to make referrals.
-Loan to new Borrower must be fully funded before referral fee is transferred to Referrer. The Referrer generally knows the underwriting standards of the protocol so they should consider folks they believe are qualified when referring.
-IMO, we should have a minimum threshold loan amount. It’s not particularly valuable to the protocol to be extending $500k loans when our lending pool is exceeding $200mm. The minimum in my view should be $5mm.
Agreed. Referred paid when the loan is funded. Referrer does not have to wait until loan is repaid (since this could be a long time, up to 90 days)
Disagree on this one. Yes, $500k loans don’t make a huge dent right now, but hopefully these are borrowers we could grow with. $5mm is high given our current underwriting standards. If we were going to set a min (I don’t think we need to), I think it should be much lower like 500k-1mm.