Receive TRU for Approval

Hi,

Im not sure I understood properly the video on your home page that showed how TRU works.

Those that hold TRU decide if a loan should be given or not. If you choose YES then there is a chance that you will receive tokens for the approval but if you say NO then you won’t.

Isn’t the preference then to say YES to everything in the hope of getting tokens without necessarily looking at the safety of the loan itself? And would this not create an unsafe lending platform for those providing the loans?

Sorry, just came across the token today so I am reviewing it for long term HODL

There are several reasons you might want to vote NO:

  • You think the loan will actually default. Then you should stop the loan by voting NO, because otherwise when it gets approved and then defaults, up to 10% of your staked TRU will be slashed to compensate lenders.
  • You think the loan is not competitive. Then you should vote NO so that the protocol keeps the money on hand to offer instead to someone offering better rates. (You do directly get more rewards for approving loans with better rates, so it’s in your interest as well as the lenders’.)

So all in all, the voting system mostly incentivizes you to do the right thing - vote yes on safer, higher-value loans, and no on sketchy or lowball loans.

(Also the voting system is set to be replaced soon anyway.)