Over the last few months, we have received continued inbound interest from highly reputable Borrowers seeking to borrow on an anonymous basis. The reason for this request is typically because the Borrower does not want to publicly reveal their (a) capital need and/or (b) company profile/attributes (disclosure in some cases prohibited by their internal compliance).
We have observed that this request is typically being made by some of the largest potential borrowers and our inability to service this request immediately stalls further interest.
With growth in borrower demand/diversification being critical to the growth of the protocol, we believe it is time to reevaluate and allow borrowers to obtain loans on an anonymous basis. Offering private borrowing will allow the protocol to scale rapidly over time and appeal to crypto and traditional finance borrowers who prefer confidentiality which is typical across institutional lending.
Key Considerations:
-All new borrowers will continue to publish a post in our forum seeking approval to borrow, however may do so with company name redacted. The posts will require a description of the borrower, explanation of credit support and use of funds.
-TrustToken will continue to perform the exact same compliance and underwriting process for public and private borrowers, i.e. no change in risk analysis and borrower whitelisting.
-All borrowers will receive a credit score which will be made public and will be used to determine loan parameters including loan amount and interest rate.
-Borrowers who elect private borrowing must be considered high credit quality and achieve a minimum threshold credit score.
-Borrower will be unmasked and made public in the event of default thus reputation continues to remain a critical underwriting parameter.
-Borrowers who elect to borrow privately will be subject to a [~50]bps risk premium in interest rate to account for the additional credit risk
-TrustToken will in the near future attempt to retain an independent third party (i.e. accounting firm) to validate via attestation the borrower’s identity, receipt of required diligence materials and completion of all compliance and underwriting requirements.
We believe this is a critical step in scaling TrueFi and as such welcome your feedback.
- Yes, TrueFi should pursue private borrowing to drive growth
- No, revisit private borrowing in the future
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