Proposal for Tech Infusion, Support, and Expansion of TrueFi Products

Proposals
1

Proposal for Tech Infusion, Support, and Expansion of TrueFi Products

TL;DR

We are Teragon—a DeFi project with a comprehensive suite of products ready to integrate with TrueFi. We’re offering our IP, tech, infrastructure and continued technical support for these products injected into TrueFi for 30 weeks. We feel these products can be an expansion of what TrueFi has envisioned, and added products like structured vaults (products) that can be a huge expansion of product offerings and afterwards TVL.

We are asking for 12m TRU (about $1.44m at the current rate) for the tech infusion and 30 weeks of work. We propose 6m TRU to be paid upfront, and 6m TRU to be streamed over the next 30 weeks of work contract.

We are looking to help TrueFi ship new product offerings and work under TrueFi’s leadership with its contractors & employees.

The Products we highlight to be injected into TrueFi:

Managed Vaults (Generalized, flexible vaults): Fund managers can launch bespoke vaults.

Structured Products (From vanilla to exotics): Starting with basic call and put overwrite strategies and easily extendable to more exotic options.

Index Products (MSCI meets TokenSets): Construct market and thematic indices with guidelines derived from MSCI in tradFi.

Our smart contracts, operational workflows, and backend infrastructure are ready to go, with frontend interfaces. Further integration with TrueFi’s ecosystem will be required, and we propose to work for TrueFi for 30 weeks to ensure a smooth transition and handover.

Introduction

Teragon is a DeFi project launched in 2022 bear market, focused on on-chain asset management. We take pride in our product design, financial engineering, and technology. Like many other projects, we had big dreams, but we fell into the “build it and they will come” mindset and struggled with marketing, preventing us from scaling.

Our product suite is designed by advisors from leading crypto trading firms and research and trading teams from top traditional finance institutions. We believe our existing product mix and engineering are a perfect fit for TrueFi, and will enable the launch of new lines of business with minimal time and money investment.

What Teragon Brings to the Table

The following products in Teragon are live and ready to use. Here is a brief description of the items. More details on Teragon can be found here: https://teragon.gitbook.io/teragon

1. Managed Vaults (Generalized, flexible vaults)

Our managed vaults allow fund managers to launch bespoke vaults tailored to their strategies. This feature is designed to be as flexible as it is powerful, making it easy for fund managers to create, manage, and optimize their investment strategies.

Our vaults offer full on-chain transparency, daily NAV reporting and creation/redemption with customizable management and performance fees. Each vault is designed to exist on multiple chains, providing full flexibility for owning assets and interacting with dApps across different networks.

2. Structured Products (From vanilla to exotics)

Starting with basic call and put overwrite strategies, our structured products can easily extend to more exotic options. This flexibility ensures extendibility and creation of more bespoke structured products including barrier options, basket options and options on Index products.

The suite comes with complete infrastructure for managing structured product vaults. Vaults can be created on any ERC-20 token on any EVM chain. The vaults have 2 components:

  • User side: Users have the ability to choose from an existing set of vaults and strategies.

  • Vault management: Vault manager decides strikes, maturities and assets on offers.

    • LP whitelisting: Only whitelisted LPs can submit bids for vaults.
    • Option exercise & settlement: Workflow management for on-chain option exercise and settlement.

3. Index Products (MSCI meets TokenSets)

We offer index construction guidelines similar to MSCI in traditional finance, allowing for the creation of market and thematic indices. Whether you’re looking to capture the overall market or target specific sectors, our index products are designed to deliver.

The Teragon Index suite comes with in depth research combining the best practices in tradFi adopted for the nuances of digital assets.

Our index methodology lays down the details regarding:

  • Determination of index constituents
  • The weight calculation methodology
  • Index level determination and rebalancing methodology
  • Inclusion and deletion criteria

The Index ecosystem is broadly split into:

  • Global crypto indices: For exposure to crypto market as a whole
  • Smart contract indices: For exposure to L1 and L2s
  • Ecosystem Indices: For exposure to specific ecosystems
  • Thematic & Sector Indices: For exposure to specific crypto themes

What does the offer include?

  • Complete tech stack: Smart contracts, API integrations and all backend infrastructure to support all product suits.
  • Full Integration with TrueFi: Teragon will provide the complete front end, back end, and smart contracts needed to integrate seamlessly with TrueFi’s existing products.
  • 30 weeks development support: Our team will be on hand for 30 weeks post-integration to ensure everything runs smoothly and to assist with any additional work required.
  • Intellectual property and Financial Engineering: Our team prides itself on our expertise in financial engineering and we will offer TrueFi any work required to maximize utilization of our tech stack.

The Team & Advisors

Teragon is built by two crypto-native, seasoned engineers, Cagin and Han, each with over 10 years of experience in software development and working on various blockchain initiatives for the last 6 years together. Both have extensive smart contract development expertise.

  • Cagin Donmez: Software & security engineer. He has designed systems that secure millions in crypto-assets and has been working on blockchain networks since 2012. Cagin has also assisted law enforcement agencies in neutralizing multiple cyber-criminal organizations with research on critical infrastructures, including military, government, and banking systems. Advisor to KPMG Turkiye board of directors.

  • Han Tuzun: A software engineer & crypto entrepreneur, Han has co-founded various crypto projects with Cagin, bringing a wealth of engineering and blockchain expertise to the team. Before working on blockchain startups in 2018, he had worked on machine learning and cryptography. He has been featured on national and international media and conferences. Advisor to KPMG Turkiye board of directors.

Teragon also benefits from a rich set of advisors from both traditional finance and crypto, including Bastion Trading and various experts from top-tier investment banks.

Timelines

We believe the integration of Teragon’s three main product lines can be rolled up and launched under TrueFi within 30 weeks.

Here is an estimated timeline for integrating individual product streams:

  • Managed Vaults: 5 weeks
  • Structured products: 5 weeks
  • Index Products: 5 weeks
  • Full audit & Launch: 15 weeks

Note: As individual modules get developed it would be possible to do phased launches while we await the full audit.

Pricing

Teragon will offer the IP, complete infrastructure and codebase and full integration with TrueFi for a total of 12m TRU tokens. Breakdown:

  • Complete tech stack and Intellectual Property: 8m TRU
  • 30 weeks of development & integration work: 4m TRU
    • 2 full-stack engineer co-founders & more employees as needed:

A word on composability, financial engineering and future work

Teragon’s tech design and product suite are designed to be combined with itself and integrated with TrueFi’s lending business to create a vertical of financial products. Here are a few sample use cases:

  • Credit linked structured notes: TrueFi’s lending vaults can be combined with Teragon’s structured products to offer fully funded structured products that provide higher APY than vanilla call/put overwrite strategies.

  • Pooled credit vaults: Teragon’s managed vaults can be used as a vehicle to provide pooled exposures to various individual lending vaults. This allows for seamless credit risk diversification and higher risk adjusted yields.

  • DAO Treasury management: The various building blocks of Teragon can be utilized to create a fully customizable treasury management solution for DAOs by combining lending/borrowing, indexing and structured products under one umbrella with NAV and performance tracking.

  • Structured products on Indices: The modular design of Teragon allows for creating put/call overwriting strategies on Index products.

  • Structured Products Strategies: The managed vaults integrate with our structured products vaults to create option strategies. One example of this is ping-pong vaults. The vault starts with either investing in a put or call overwriting strategy. If the option gets exercised then the vault switches to the opposite direction. E.g. vault starts with USDC and sells put options on ETH. If the put gets exercised the vault uses physical delivery to exchange stables for ETH and switches to a call overwrite strategy.

Closing Remarks

The technology and financial engineering that Teragon offers come at a reasonable price. We believe that integrating Teragon can turbo-charge TrueFi’s next suite of product offerings. With our tech and products ready to go, the time to market would be a fair compromise of low risk and cost effective development service.

We’re here to answer any questions you may have.

2 Likes
2

I’m Han, the other co-founder of Teragon. We’re excited to discuss how Teragon can assist TrueFi and look forward to a productive conversation.

2 Likes
3

Christian from Cicada Partners here. I thought it best to just itemize my questions below regarding the concerns I have with this proposal:

• Won’t this effectively just subsidize your work on Teragon that you can continue marketing as a separate product with Truefi footing the bill? Would Truefi own the IP in perpetuity to the developed projects if this were to pass? If not, what would happen after the 30 weeks if the contract wasn’t renewed?

• Would all of the TVL be ported from your current Dapp to Truefi?

• What track record do you have delivering safe smart contracts with significant volume being pushed through them? Last post I see on X was due to a loss of Funds in March 2023, with no recent information. I also see only minimal TVL on the Dapp currently.

• How would you envision assisting us (Cicada) in launching additional Lines of Credit and assuming the responsibilities that Wallfacer took on to support our product launches?

• Given you say that the Teragon products are “ready to go” why would you need 30 weeks of implementation time? Have audits already occurred?

• It appears that the products you have listed are more geared towards trading/structured product vaults rather than credit specific vaults. As such, how does this help Truefi position itself as a RWA lending application rather than one of another 100 degen structured products applications like Ribbon, Friktion, etc?

• There is very little information about your project as X, Discord, and Medium are outdated with no new information since last year. Why have you not kept up to date with your online presence?

5 Likes
4

Hello Christian :wave: Thank you for providing the first batch of insightful questions!

If this proposal passes, TrueFi would own Teragon and its IP indefinitely. TrueFi would probably decide to discontinue Teragon. The 30-week contract would allow TrueFi to fully leverage Teragon’s assets: the technology, IP, methodologies, and everything else we offer with 2 technical co-founders.

They could be migrated to TrueFi or refunded, this would be up to TrueFi.

(Replying this first, as it is relevant for the next question too.)
Over the past year, we have paused active development on Teragon. Despite our efforts, we couldn’t achieve product-market fit and used up most of our treasury. Launching a token, implementing token-based incentives, or raising Series A were potential paths. However, to avoid risking more capital during the bear market, we chose to cut costs and enter a dormant phase.

The most Teragon contracts has hold was $3m. We haven’t had a security incident for 2 years. The X thread on loss of funds is about the Euler Finance hack effecting the vault investors.

An interesting fact from the thread: The vault manager were not able to extract the collateral and that would be the only option for a statically programmed index. However, they were able to take out a loan as a last resort, worth 70% of the potential 100% loss.

3 weeks later, Euler has recovered their stolen assets and our vault investors bounced back from -3% to positive returns.

We are not proposing to take on the responsibilities of Wallfacer. Instead, the proposal is for TrueFi to utilize Teragon’s products and to transfer our technology, documentations, methodologies, and more.

I believe that TrueFi should have contractors or employees for this purpose, and we will do our best to ensure a smooth handover so that they are as knowledgeable about Teragon’s assets as we are now.

That said, my co-founder and I are aligned with TrueFi. If the need arises and we are available, we would be willing to assist with anything outside of this proposal.

We haven’t been audited and as indicated in the timeline, we will manage the auditing process. Beforehand, we will go over the contract, backend and frontend projects, review, document, add additional tests and do internal audits. There’ll be decisions to be made with stakeholders and development for integrating with existing TrueFi contracts and frontends. For the contracts, ERC-4626 compatibility and protocol fee will be among them. The development and deployment flows would be integrated into what TrueFi already has.

I agree that “ready to go” was not clear. While our products were already operational, they were not initially designed to integrate with TrueFi. Ensuring a smooth handover will be essential so that the IP can become an integral part of TrueFi after our contract.

Great point. Yes, we haven’t worked on credit infrastructure but have focused on generalized vault products. Proposing the acquisition of similar technology wouldn’t make sense anyway.

With this acquisition, TrueFi could create in-house structured products based on credit products. TrueFi’s beta index vaults have shown us there’s a valuable opportunity for joining forces.

The strategy for TrueFi, if we join, and the specific products to be deployed would be determined by the leadership and business development teams. We would share the technical possibilities, offer our opinions, and once agreed upon, deliver what is asked.

1 Like
5

How large is the team? You note two headcount and more employees, “as needed”. Could you kindly share the current scope of your org? Are you venture backed? Is this an acqui-hire? What would the team expect to do upon conclusion of the project term and what would be an ideal scenario?

The rate is approximately $64,000 a month.

Is that two for the two headcount or how many do you anticipate?

Would it be possible to see an engineering Gantt and burndown?

5 weeks per product seems overly optimistic? Any comments here?

You note 15 weeks for Audit and launch. Could you provide a breakdown to us of what you see is involved and the linear contingencies of each task? This is something the DAO has not seen before so seeing it now would provide confidence in the team’s ability to execute.

How are you currently thinking about your security roadmap? SC/Audit/FV/Front-end? Do you posses all capabilities in house? Who would you choose to audit and is that included in this fee?

What is the status and security testing of the core stack and IP you are selling to TrueFi?

Do you have any existing (live) products on Ethereum or any EVM-compatible chains? If so, What is the TVL?

Thanks for the proposal.

It is cool to see new service providers popping up to serve the DAO.

4 Likes
6

Hey Sanctus, appreciate you taking the time and raising these points.

The proposal is for the 2 technical co-founders outlined in our original post who will commit full-time to TrueFi. To clarify, the “as needed” indication means we may increase the workforce of our engagement if we deem needed, which wont affect the previously agreed upon terms of the engagement.

Yes, I would say this proposal is very much akin to an “acqui-hire”. Teragon with all of its IP and 2 of its technical co-founders joining TrueFi to integrate all Teragon product-lines and tech stack and know-how and turn them into TrueFi products and businesses with the direction of the TrueFi community and leadership.

Our proposal is designed to provide TrueFi with complete, composable products that expand its suite of offerings. Over the 30-week engagement, we will:

  1. Develop and integrate three new product lines (Managed Vaults, Structured Products, and Index Products) into TrueFi’s ecosystem. (see items 1, 2 and 3 Proposal for Tech Infusion, Support, and Expansion of TrueFi Products)
  2. Create comprehensive documentation and a knowledge bank for each product.
  3. Provide the means for Truefi to expand its product lines and launch & operate new ones independently.
  4. Provide thorough training to guarantee seamless operation and future development, ensuring there is no element of “contractor leverage” present for further potential engagements.

I am assuming you’ve arrived at this number by adding in our proposed compensation of 8M TRU for the IP and all related resources, making the total compensation effectively (8M for the IP + 4M for 2 full-time engineers) 12M TRU / 30 weeks. The second portion of the compensation we price at 4M TRU is for 2 full-stack engineers and 30 weeks of full-time commitment. This is a fair rate for experienced blockchain developers.

The reason we anticipate bringing in more people (at least 1 more for now) is that we (Cagin & Han) consider ourselves aligned with TrueFi’s goals and its success. But as I’ve noted in the previous point, the costs that arise from increasing numbers would be on our dime hence our discretion.

The 5-week timeline per product is based on our experience with these systems and the fact that the core functionality, frontends and management flows already exist. We acknowledge this is an aggressive timeline. We’re prepared to adjust our workforce if needed, and we’ll provide regular updates on progress.

In an effort to paint a clearer picture regarding audit processes and timelines, it would look like the following:

  • Documentation of project requirements and audit scope
  • Ensuring that there are tests for most of these requirements
  • Ensuring the code is high quality
  • Ensuring the documentation is high quality
  • Internal audit with smart contract audit tooling
  • Internal audit with line-by-line review
  • Freezing development and agreeing on a commit to be audited
  • Reaching out to about 10 auditors and collecting offers
  • Creating a thread for the offers in this forum
  • If decided, going on an on-chain vote for the auditing costs
  • If the vote passes, paying the auditor
  • Assisting the auditor complete their audit & preliminary report
  • Sharing the preliminary report with the forum once its delivered
  • Fixing the agreed upon issues
  • Internal re-audit with smart contract audit tools
  • Internal re-audit with line-by-line review
  • Freezing development and agreeing on a commit to be re-audited
  • Helping the auditor complete their re-audit & final report
  • Sharing the final audit report with the forum once its delivered
  • Sharing our report and providing asked content about the process

While we have performed internal audits for Teragon and other products, we do not consider these to be professional audits. Teragon products were audited in-house. Teragon software stack has not undergone 3rd party audits. However, it has been in production securing considerable TVL.

We would need to work with 3rd party auditors and decide on what to prioritize according to the strategic direction of TrueFi. Audit services and its related costs are out of our scope and proposed compensation.

I think it’s important to note that even if the contracts were previously audited, they would still require re-auditing after integration with TrueFi’s ecosystem.Thus, we have considered the auditing process in our proposal timeline and included it in the original post (see https://forum.truefi.io/t/proposal-for-tech-infusion-support-and-expansion-of-truefi-products/1728#timelines-10).

The mainnet deployments are live on the Avalanche C-chain network. Teragon | Vault Overview
X post.

1 Like
7

Thanks for the reply.

So Audit costs are out of scope.

What is the cost total cost “go live” on this product? What will be the anticipated opex after this initial phase?

Generally, acquiring the right to IP in advance is less than ideal, especially when 2/3 of the fee is the IP cost, it feels a bit more like a cash grab.

A better structure would have been 75k a month and a performance incentive clause . If you are set on the sale of IP, you probably need a third party valuation which is going to be a headache and open the deal to debate and collapse.

A better structure would be a fee share or incentive structure that unlocks additional fees upon performance of quantitative benchmarks.

That aligns incentives between the team and TrueFi. As composed, this format pays for IP upfront that could simply not work out for TrueFi (and it has already not worked out for your team, and is currently deprecated, TVL sub 1mm).

Second, for a set of unique products that are driven by a custom integration by an external team, ongoing operational terms and a contract rate should be agreed upon in advance with unwind terms to avoid sunk cost or sunk cost leverage, as we are seeing with Wallfacer now.

Anyway, just some thoughts to consider. The idea is nice but the devil is in the details.

9

In comparison to Wallfacer this offer seems more reasonable. It offers ready tech and also broadens the range of TruFi offerings. There’s a clear strategy for implementation in place. It appears that for less than half of Wallfacer’s cost you receive triple the number of products including all the IP. Wallfacer’s fee of $500,000 monthly for basic smart contracts seems way too high.

Main concern is around the ongoing support for the current TruFi products which wallfacer does. How confident is the Teragon team in their ability to manage this?

Overall, I would support this over Wallfacer.

10

I dont think TrueFi DAO needs to rush into any of the current proposals.

I think the DAO waits for 2-3 mths and not rush into and new development team proposals.

Lets see what comes

2 Likes
11

The total cost of going live will not include any additional expenses for TrueFi. We will cover the contract deployment fees. Anticipated operating expenses include contract interaction time and low on-chain gas costs incurred by contract managers, which will be paid by them. These examples demonstrate the low risk of delivery, as we have already handled these in a different context.

I think this proposal is like buying a fully furnished house rather than an empty lot and blueprints. Our intellectual property (IP) represents extensive financial engineering, development, and experience running products. We aim to give TrueFi a significant head start in expanding its product suite. It is not merely a tech purchase, but a tech infusion of production-ready products that can significantly reduce TrueFi’s time-to-market.

We can add the following to the proposal:
• We will transfer all IP, including processes, to TrueFi’s board of directors.
• A vote for retention or contingency off-boarding will occur four weeks before the last day of the contract.

The key is to integrate the team effectively and establish a good rapport with the community to minimize the risk of conflict of interest or sunk cost leverage.

12

Thanks for the reply. Our proposal’s scope is limited to the listed products and services around them.

13

Quick question:
How it’s supposed to help TrueFi get more TVL? As far as I understand you want TrueFi to buy a bunch of products (very similar to the ones it already owns) and support with integrating it from 2 engineers.
But who is supposed to find and work with managers? (looking at the fact it was stuck at 3M it didn’t end well last time)

2 Likes
14

I don’t see value in TrueFi paying for pre-built products not specifically designed for Truefi needs right now. And as mentioned, very similar to ones already owned by TrueFi.

At this point, this current proposal as it stands doesnt seem to be financially beneficial for TrueFi.

And quite frankly, would TrueFi be seeing this proposal if these products were successful in their own right?

5 Likes
15

Quick heads up: the proposal is now up on Tally. Voting begins in 2 days.https://www.tally.xyz/gov/truefi/proposal/15332378246254120039475099821609901036354010962115423311575021637120510957626

1 Like
16

+1 to this. I don’t see why TrueFi needs these products.

4 Likes
17

I love how governance is doing recently. Seems like this proposal brings so much value to the protocol that no one wants to show they support it and they vote for it from fresh addresses.
Curious who could be these people…

(or rather a single person looking at the dates)

18

If this gets executed, we will remove our TVL from the platform FYI. We voted no although we dont have voting power but are an LP

0x8A25d8C9fa…083F78

19

Our proposal to integrate Teragon’s product suite into TrueFi has been approved by DAO vote!

As proposed, we will integrate Managed Vaults, Structured Products, and Index Products into the TrueFi product suite and collaborate with all relevant parties to help launch these products.

Our 30-week engagement will start one day after the proposal execution on Tally. Regular progress updates will be provided throughout our engagement and the integration process.

We’re excited to begin and look forward to contributing to TrueFi’s growth. Thank you for your support.

1 Like
21

I am writing to address a recent oversight concerning our executable proposal. Due to an incorrect timestamp parameter, our proposal was rendered invalid. The requirement was to start the stream at a future timestamp, which is not a necessity for implementing stream functionality but was coded in by Sablier.

The voting was to conclude on Saturday night, and we planned to start working on Monday, beginning the stream accordingly. However, we did not account for the two days of execution delay. Specifically, on Tally UI, we set the stream payment start timestamp to July 15, 00:00 UTC, causing the stream to fail to be initiated beyond this date.

The issue was not apparent during our simulations, as the time was earlier than the given stream start time, masking the problem. Moving forward, I will implement a more rigorous review process to prevent such oversights on executable parameters.

I want to emphasize that no funds were at risk. We can execute the proposal, and it would result in a failed transaction. This issue was not identified by us or the cancellers before July 15, after the given timestamp.

To err is human. At 30 years old, I have been coding since I was 14 and have spent the last 6-7 years working in the blockchain space. We made a mistake picking the parameters on Tally UI due to not being familiar with the execution delay parameter, which doesn’t involve programming at all. This mistake on determining the stream start timestamp has been a humbling experience. Nonetheless, I recognize that mistakes are valuable learning and growth opportunities. Such harmless mistakes often help more than they hurt.

What are the benefits of this mistake to TrueFi? It offers us an opportunity to review what happened and how we should move forward collectively.

This was our first engagement with TrueFi, and our approach involved creating a proposal thread, discussing it, and proceeding with an on-chain vote. This process was in line with other proposals, so despite the heated discussions we don’t believe we deviated from usual practice for proposals and voting. We will reevaluate everything and come back with next steps for our proposal.

1 Like
22

It has become evident that there needs to be clearly defined procedures and rules on what constitutes a legitimate proposal, why and when a proposal can be overturned by the “Canceller Authority” and transparency regarding the parties and their actions entrusted with this duty.

The recent events of the past 3 weeks, and our experience during the proposal process have highlighted several critical issues that need to be addressed.

  1. Definition of “Governance Attack”: There is an urgent need for a clear definition of what constitutes a governance attack. This definition should be specific enough to prevent misuse of protective measures like the “Canceller Authority”.
  2. Transparency in “Canceller Authority”: When the Canceller Authority is invoked, there should be no open questions regarding the persons and their actions. This includes:
  • Public disclosure of the identities and affiliations of those making the decision
  • Proper explanation of the reasoning behind the cancellation
  • Evidence supporting the claim of a “governance attack”

The cancellers’ goal should be to ensure a governance system that is capable of protecting against genuine threats while respecting the will of the community.

We invite the Truefi community to engage in this crucial conversation about the future of the DAO’s governance processes. This issue is crucial for a healthy governance. Together, we can build a stronger, more resilient TrueFi.

4 Likes