Precession has submitted a forum proposal describing our Small Business Receivables Pool 1 . We are hereby requesting the TrueFi DAO consider directly funding a ‘super senior’ tranche in the pool. We believe the risk profile of the super senior tranche is sufficiently low, providing a high level of stability for the TrueFi DAO treasury. Such a structure may also be used as a template for future transactions and allow the DAO to capture the benefits of subordination to enhance the collateralization of TUSD using real world assets.
Structure
With the TrueFi DAO as a super senior lender, other TrueFi community lenders may also participate and earn an enhanced yield. Subordinate or First-Loss capital will be provided by Precession, which will enhance both the Super Senior and Senior lenders from the TrueFi community. (see diagram below)
Economics
We request a loan in the amount of $7,000,000 at a 5% fixed rate.
Voting yes, but with the hopes that this is the first step in a broader vision for TrueFi as a DAO participating in its pools.
Perhaps the broader vision for this concept could be a super senior pool that provides this sort of leverage to all TrueFi pools, with the proceeds going back towards the Treasury, externally managed by an elected third party (perhaps TrueTrading to start) to provide high level risk assessments/reporting and voted in (or replaced) on a 12 month cycle.
I love the idea of the TrueFi DAO treasury participating in lending to portfolios on the platform.
However, the treasury does not currently have adequate stables to make the requested size of loan. In reviewing the TrueFi Treasury dashboard and the Treasury wallet currently receiving protocol fees, I see less than $50k of USDC, with all remaining assets in TRU.
That means, to fulfill this proposal, TrueFi DAO would need to sell $7m worth of TRU. At the current price of TRU, and at the offered rate of interest, I cannot support this proposal.
I’d like to see the TrueFi Treasury both diversified and actively participating in portfolios, but this strikes me as the worst possible time to sell, both based on historical price and the market signal of the DAO exiting its underlying protocol token.
@RDharia@precap - definitely a difference, then, and I’d be happy to change my vote, provided I understand correctly:
NOT being proposed: TrueFi DAO treasury to liquidate some TRU reserves into stablecoins compatible with the Precession portfolio.
IS being proposed: TrueFi DAO to approve a one-time loan into the Precession portfolio, once launched, from one of the four stablecoin pools managed by the DAO, to enjoy lowest risk tranche at 5% APY.
If that’s the case, happy to support, though I wonder, is there any precedent to this kind of lending on TrueFi to date? I mostly wonder how it’ll be reflected in the pool, presumably as a $7m bullet loan to Precession as a borrower directly?
Precession is seeking a seed loan for their portfolio from the DAO stablecoin pools based on the terms they’ve requested above. This represents the first time the DAO will independently elect or decline to provide seed financing to an independent portfolio manager. TrustToken has assisted Precession through the onboarding process however is not conducting a credit review on seed loan requests such as this one. The community should diligence this proposal based on the information presented in these posts and seek clarity to the extent necessary.
Thank you all for your support and engagement. As further explanation and justification for the request is warranted, please see the update to the original forum post here.
We have identified $10mm in initial SME assets for Pool 1. These receivables are backed by ERC tax credits payable by the IRS. The IRS typically remits payments in 6-8 months, but can take up to 10 months in some cases. In order to avoid an unfunded liability, we are requesting a 1-year loan commitment.
