There was recently discussion in discord around some borrowers looking to increase the amount they are borrowing very significantly (some as much as 4-10x their most recent amounts). While this strong demand from borrowers is very healthy for the platform, we need to make sure that the platform is not doing anything risky.
We are prioritizing building out a full credit model that will be verified on-chain. But until then, while we are still voting on loans manually, I would propose the following rules:
1. Borrowers cannot increase their loan size more than 1.5x from their most recent loan
2. Borrowers cannot borrow more than $5mm from the protocol at a time unless they have shared more detailed (and/or ongoing) financial data with TrustToken Inc.
The goal of (1) is to keep the platform safe by forcing each borrower to establish a track record of repayment with TrueFi before taking out larger loans. I am proposing 1.5x because it seems to me to be fast enough to allow borrowers to ramp up to large sizes within a few months, but still slow enough to keep the platform safe. I am open to other numbers such as 1.75x or 2x if folks think that would still protect the platform.
For context on (2), there are tools for viewing aggregate statistics about a trading firm’s exposure and risk (e.g. how much exchange leverage they are using in total) without seeing their individual positions or trades. We believe this type of financial data will be a valuable input to our credit model (which is under development right now) and can help us to make sure borrowers are not taking outsized risks with this capital.
I’d appreciate hearing folks thoughts on this proposal. Thanks.