Putting forward a simple idea to reduce the minimum loan amount to 10,000 TUSD from the current 1,000,000 TUSD. This has been put forward by some borrowers and several members of our community.
A reduction in the minimum borrowing amount would allow the community to get to know new borrowers at a much lower risk. And it would allow us to increase the number of whitelisted borrowers in the TrueFi protocol at a greater pace.
The technical execution is also fairly simple and can be done quite quickly.
Please vote "Yes or “No” to signal your opinion and do post in the comments if you have any feedback on the idea.
I have voted in favor, I believe this will allow us to safely onboard new borrowers and build trust with them as a community. A $10k-100k loss is much more acceptable for the protocol and is an appropriate credit limit for borrowers that the community wants to work with but doesn’t feel as comfortable with yet.
At this point, it’s more important to prioritize expanding the lending pool rather than the borrower pool. I always thought that one of the most important safety features for TrueFi is the too-big-to-not-sue size of the loans and I’m assuming that there is still plenty of untapped demand for >1 million loans. Of course defaults are inevitable, but why not try to keep an impeccable 0% default streak for as long as possible? Once we effectively start tolerating small defaults, we risk scaring off a lot of potential normie lenders who are naturally skeptical of the wisdom of uncollateralized lending in a wild west crypto world. I think we should only expand into smaller loans once the on-chain credit score tools are built out.
of course, that could possibly stretch the ability of the TrueFi staff to vet everyone who wants a $10K loan and mean more defaults. But at the same time, it would vastly increase the number of people who want to borrow (decentralize).
Also, I think someone else already mentioned this before – but why not open up the lending to anyone who bought Truefi on Coinlist? those are already accredited investors.
Acknowledging your concern, my opinion is that diversification benefits from a large number of borrowers are significant.
Also don’t see how this would in any way lead to a reduction in lending pool. We are committed to keeping the protocol free of default. We are not going to tolerate small or large defaults. Also the core idea is that we want the borrowers to be tested by the protocol with a smaller loan size first. Borrowers should build a good track record of repayments before asking the protocol for a larger loan size.
I agree, there are a lot of people who would like to take a 10-25k loan under this conditions.
Decentralization needs more and more people involved and both sides of the equation (borrowers and lenders) could multiply if this amount is reduced to 10k.