New Approach for TrueFi TVL Growth and Risk Management

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Over the past few weeks, we’ve seen several proposals around renewing or changing the contract for risk management and lending vault creation/vetting. I previously responded to Type3’s proposal, but given the emergence of a new proposal from Cicada, I believe it’s worth starting a fresh discussion around an alternative approach to responsible TVL growth and business development.

The Problem with the Current Approach

Many community members have pointed out the significant costs associated with Cicada’s proposal, especially given the lack of tangible TVL growth. While Type3’s response represents a marginal improvement, I believe it still falls short of addressing the root issue. For too long, TrueFi has relied on its token as a primary driver for business development, but this model has proven ineffective—not just within TrueFi but across the industry.

We are at a crossroads where the rules of the game have evolved. To position TrueFi for sustained growth, we need to rethink our strategy from the ground up.

My Proposal: Incentivize Capital and Market Participation

I propose a more market-driven approach to incentivizing TVL growth:

  1. Revenue Sharing Model:

  • Offer 25% of revenue from TVL to the party responsible for bringing that capital to TrueFi.

  • Additionally, share 25%-35% of revenue with the capital itself (in addition to the return it earns).

  • If needed, offer locked TRU as a sweetener based on the economic viability of each deal.

  1. Focus on Capital Acquisition:

  • Capital is scarce, but there are borrowers ready to deploy it.

  • If we secure capital efficiently, sourcing borrowers will likely be a more straightforward task.

  • By leveraging the scarcity of capital, we may also be able to push some of the incentive costs onto borrowers, thereby minimizing TRU sell pressure.

  • This strategy aligns with the DeFi integrations we have in flight with Morpho, Ozean, and Plume. Having liquidity lined up before or near each go-live date sharpens our GTM story and removes a significant portion of “cold-start” risk.

  1. Move Away from Token-Driven BD:

  • Token incentives have not driven sustainable growth. Rather than distributing TRU as a primary incentive, let’s focus on structuring deals that directly benefit the capital providers and market participants.

  • This approach not only aligns incentives but also reduces token dilution and downward price pressure.

Rethinking Risk Management

Both Cicada and Type3’s proposals emphasize the importance of risk management, which is undeniably crucial. However, the cost-benefit ratio needs to be reconsidered.

  • Cicada’s Approach: While they have shown progress in integrating RWA ecosystems, the lack of immediate TVL growth does not justify the continued expense. The partnership with Plume and the legal groundwork are promising, but without substantial TVL, the proposed budget seems excessive.

  • Type3’s Approach: Their experience in credit risk and traditional finance is valuable, but the remuneration structure appears to be misaligned with the level of TVL growth expected.

A More Efficient Risk Management Strategy

Instead of relying solely on external advisors, TrueFi’s Board should take a more active role as fiduciaries. We have the experience within the community to contribute without incurring high external costs. This would not only save resources but also increase community involvement and transparency.

Next Steps

  1. Community Discussion: I’d like to open the floor to feedback on this new approach. Do you think a market-driven incentive structure is more sustainable? Are there potential risks I haven’t addressed?

  2. Evaluating Risk Management Options: Should we transition to a more community-driven risk management model? If so, how can we structure it to ensure robust oversight without the high cost?

  3. Finalizing the Proposal: Based on community input, we can work on drafting a formal proposal that balances TVL growth with sustainable business practices.

This was intentionally not posted as a TFIP because it’s meant to spark an open discussion with the community, so that all stakeholders can weigh in on the path forward. I did put some numbers out, but I’m sure the parameters could use some improvement from the smart folks across the community. We’re at a pivotal time for the DAO. We can and should learn from our past and the crypto ecosystem more broadly. Looking forward to your thoughts and feedback on this. Let’s work together to shape a more effective growth strategy for TrueFi.

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[TFIP-23] TrueFi Operational Expense Request (Updated based on feedback)
Managing Legacy & Current Credit Vaults
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I want to add that since there are two competing proposals currently in TFIP-24 and TFIP-25, its worth checking also the value versus TVL they bring for the DAO’s potential expenses.

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While upfront costs for Type3 is better, with only a bit over 1 million TVL, the costs become about the same between the two.

Looking at expenses provided by Cicada, despite having no TVL growth, and three borrowers, there’s been costs for 3-4 full time headcount, which would make very little sense in terms of cost-benefit.

Current Vault Maturities are follows:
Gravity Team (1 of 2 vaults): Jun 4, 2025
Wincent: Jun 25, 2025
Wincent Investment Fund: Jul 2, 2025
Fasanara: Aug 21, 2025
Gravity Team (2 of 2 Vaults): Feb 5, 2026

With little TVL traction among these, two of three borrowers and TVL (of sooooo little there is) will lapse in 3 months. So how much “management” is there to be done?

Links to Proposals:

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Dear SuviCrypto,

Your analysis demonstrates the issue with a continuation of Cicada’s contract. Unless they suddenly attract $8m in additional TVL , they have no incentive to continue working.

Our proposal is textured, incentivising sustained growth in TVL. We have confident in our approach of working directly with traditional funds and their LPs to attract new TVL.

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Thank you again for the thoughtful reply and for raising concerns that I know many TRU holders share. Your transparency and willingness to engage are exactly what the DAO needs right now.

You’re absolutely right to be asking about outcomes. Over the past year, we’ve seen several service providers receive TRU grants with the promise of growing TVL or launching new products. Unfortunately, that traction hasn’t materialized on-chain or in the broader perception of the TrueFi ecosystem. The concern around TRU distribution without clear results is one I share.

That’s a big part of why I proposed shifting our approach. Instead of pre-paying large amounts of TRU for promises of future work, we should move toward performance-based incentives. In this model, contributors would share in protocol revenue—and optionally receive locked TRU—only after they bring capital into the system or create measurable value. This better aligns incentives and avoids dilution from unproven results. We should be rewarding those who deliver, not just those who propose.

On the governance side, you’re right again—the community deserves time for discussion before proposals move to Snapshot or Tally. Pushing things forward too quickly undermines the spirit of decentralization. Transparency and community feedback should always come first, and I’ll continue to speak up when that process isn’t followed.

You also raised a critical point about TRU price risk. The reality is that in today’s market, most participants are selling everything that isn’t BTC or ETH. That may change, but right now, we can’t fight the tape. The DAO needs to be more strategic in how we manage token emissions.

One solution I support is routing distributions through market makers or structured agreements. This would help prevent large, unmanaged market sales—reducing downward pressure and ensuring that TRU is distributed in a coordinated, value-accretive way.

Over the long term, I believe TRU can be a powerful incentive tool. But first, we need to focus on short-term execution—growing TVL, launching products, and rebuilding trust—so there’s a foundation for that longer-term vision.

Thanks again for sharing your perspective. I really appreciate your voice in the community and hope this can spark a broader conversation about making TrueFi stronger, leaner, and more aligned.

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Dear TrueFi Community

Please see below a snapshot of our engaged clients who would like to explore using TrueFi’s credit and asset vaults.

Funds

  • Liquid Crypto, weekly redemption, 25%+ APR
  • BTC DeFi Fund, daily, 10%> BTC%
  • Trade invoice, daily, 8-10%
  • India Climate fund
  • Pan-Asia late stage tech Fund
  • Africa Venture Capital
  • Africa Renewable Energy
  • Global Solar

Direct Assets

  • Solar nano-coating Global, 15%
  • Producing Oil Wells US, 30%+
  • Battery arbitrage Sweden, 30%+
  • Pre-development Solar, 15%
  • Pre-development mining, 20%+
  • Floating solar projects
  • Waste-to-energy projects

Whilst we have done a lot of work upfront, the proposed grants will help subsidise the due diligence, transaction structuring, and legal costs required upfront.

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Is there a way to think of 2 or 3 specific leads that can be easiest to execute?

For example, liquid crypto, BTC Defi Fund and Trade Invoice might be easy ones to structure since there’s plenty of experience with these in one way or another way?

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Yes, those are our priority. We would only launch other vaults with clear TVL commitments in place.

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Thank you everyone for the continued discussion—especially those who’ve taken the time to share detailed feedback and concerns. It’s clear we’re all aligned in wanting to see TrueFi succeed.

Let me be direct about where I stand: we should not be paying six-figure grants up front to external groups just for the chance that they might bring us deals.

If Type3, Cicada, or anyone else has access to capital or deal flow—great. But the DAO shouldn’t be taking on that risk. We’re not in a position to fund speculative promises. The best path forward is a performance-based model, where contributors earn revenue share—or locked TRU—only after they deliver capital or create measurable results.

And let’s be honest: if we stepped back today and asked, “What would we do if we were starting from scratch with the tech, the brand, and the token we have now?”—there’s no chance we’d propose six-figure prepayments just to get introductions. We’d run lean. We’d go directly to the market. We’d build trust by executing.

We’ve already seen what happens when we commit too much up front. That’s why so many in the community are demanding change. The intentions may have been good—but the results have been minimal. Lack of transparency, missed timelines, and ongoing emissions have weakened trust—and rightly so. We can’t afford to keep repeating those mistakes.

To Type3’s credit, they’re actively engaging. And if they’re confident in their pipeline, then a revenue-share model shouldn’t be an issue. If they don’t believe this is a positive EV initiative without upfront funding—well, that tells us what we need to know.

Let’s get back to first principles:

We have tech.
We have a brand.
We have a token.

That’s more than most protocols get. Now it’s on us to use those assets wisely.

We don’t need inflated service contracts. We need aligned partners. We need real execution. And we need a community that sees results—not just roadmap slides. If someone believes in what they’re offering, they should be willing to share in the upside, not get paid regardless of outcome.

Let’s grow TVL.
Let’s close deals.
Let’s build a real business—scrappily, transparently, and with proper incentives.

This isn’t about being cheap. It’s about being smart. The DAO’s capital is precious. Let’s act like it.

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Since you mentioned the current external service providers resulting in little traction for Truefi currently, I really wanted to show how the sablier streams that are left by each of Akemona (TruMarkets?) & Adapt3r & Cicada.

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