Introducing Trinity
Today, we introduce Trinity V1, a protocol that has been months in the works.
Trinity is a lending protocol built to increase capital efficiency on RWAs issued onchain.
The protocol makes RWAs more composable across DeFi by introducing $TRI, a highly liquid dollar-based token that can be transferred and traded on secondary markets.
Trinity enables users to borrow against RWAs and other yield-bearing assets, minting $TRI against deposited collateral.
tfBILL, the tokenized T-bill product on TrueFi, will serve as the first collateral asset backing $TRI.
tfBILL holders can use Trinity to create leveraged positions, potentially earning a net yield of up to 15% on tokenized T-bills.
In the future, Trinity could onboard additional yield-bearing assets as collateral. Such assets could originate from TrueFi and beyond, including:
- Additional TrueFi pools (crypto-native credit, asset-backed loans, EM credit, etc.)
- RWAs from other protocols: Ethena sUSDe, etc.
- Crypto-native assets: MakerDAO sDAI, etc.
$TRI is a transferable token that can be traded on secondary markets and easily integrated into other DeFi protocols.
DeFi participants may choose to use $TRI because holders can earn real yield by staking TRI. Staked TRI (sTRI) earns a portion of fees paid by borrowers to the protocol, with sTRI yields expected to be near or above T-bill rates.
Early access: Live on testnet
Trinity is live on testnet today at https://trinity-app.vercel.app/ but has not yet been audited.
To learn more, read the docs at https://docs.trinityprotocol.xyz/.
How Trinity Works (Example use case)
-
Alice is a large, sophisticated investor who wants to earn a leveraged yield on her idle stables
- Alice onboards to tfBILL.
- She deposits 500k USDC and mints $500k tfBILL on TrueFi (~5.3% yield).
- She then deposits $500k tfBILL into Trinity, and can now borrow up to [92%] LTV.
- She mints 450k TRI and pays 4% interest to Trinity on borrowed TRI.
- She swaps 450k TRI <> 450k USDC on Uniswap.
- She uses 450k USDC to mint $450k tfBILL, then repeats steps 2-4 above to increase leverage.
- Outcome: After several turns, Alice can generate >15% net yield (see details) on tfBILL.
-
Diego wants to earn yield on his idle stables, via 1-2 simple transactions
- Diego swaps 500 USDC for 500 TRI on Uniswap
- Diego stakes 500 TRI into the sTRI vault
- Outcome: Now, Diego earns ~5.7%* on sTRI
-
sTRI yield is dynamic and depends on interest rates and the percentage of TRI supply in the staking vault. Assuming borrowers pay 4% and 70% of TRI is staked, sTRI could pay 5.7% (source).
Trinity = A new part of the TrueFi Ecosystem
Trinity strengthens the value proposition to both lenders and borrowers on TrueFi.
For lenders:
Trinity makes it easy for TrueFi lenders to enhance yield or hedge risk by borrowing against tokenized assets.
For managers/borrowers:
Trinity makes TrueFi the best platform for attracting capital. Because lenders can easily acquire leverage and hedge risk through Trinity, they can deploy more capital into TrueFi deals than they would on other platforms.
To begin, Trinity will have minimal governance requirements, as outlined here.
Why we built Trinity
Over the past few quarters, we have chronicled the pace and adoption of real-world assets across the industry. You can find these on our YouTube channel, in the “market updates” playlist.
In the process, we’ve had 3 major takeaways:
- Broad transferability and fungibility are prerequisites for the success of real-world assets
- Supply growth is fueled by a small subset of power users and/or large-scale partnerships
- Lenders want simple UX
Historically, the only private credit in crypto that achieved broad market appeal has been lending to crypto firms. In our view, lending to trading firms has been successful because it’s the only type of private credit that meets the core needs of DeFi lenders:
- Easy to understand
- Short-duration
- High real yields (>10%)
- Transferability
The data supports this. The peak of onchain RWAs was in April 2022 when Maple and TrueFi each had hundreds of millions in loans outstanding to trading firms.
Two years later, the market for onchain credit has now returned to only â…“ of that.
In our position today as contributors to TrueFi, we have to think of the “bets” we want to take. We want to make a large bet for TrueFi that can capitalize on this opportunity through Trinity.
Go-to-Market
We propose launching Trinity on Base: Coinbase’s L2 network.
Why? Finding a home for Trinity is one of the key considerations we have worked through.
- Today on ETH L1, gas costs have made daily onchain vault updates cost prohibitive for Adapt3r. Building Trinity and underlying vaults on an L2 can reduce user costs, improving the UX significantly for both lenders and vault managers.
- The most conservative initial rollout for Trinity would involve barring US users.
- By building on the Base L2, Trinity can access an audience of ~150k verified addresses. Trinity can use Coinbase Verifications to enable transfers of TRI only between (a) non-US verified users, and/or (b) whitelisted institutions
- Another reason we like building on Base is that we think the Optimism Superchain ecosystem is one of the most exciting ecosystems in crypto today.
- In the future, we could expand to other Superchains (Fractal, OP Mainnet, etc.) as we find more use cases.
As the call to action for this post, we request $100,000 USD worth of TRU (with a 20% buffer) to pay for an audit of Trinity with ChainSecurity. We will finalize the amount of TRU at the time of proposal with funds sent to [TBA]. Excess funds will be returned directly to the treasury. We can also provide an invoice to the foundation as an additional check on spending.
Next steps
- Testnet deployment (COMPLETE): live today at https://trinity-app.vercel.app/
- Audit: Trinity needs to be audited. This post requests funds for a ChainSecurity audit
- Enhancements: Based on feedback from early users and testers, we expect to improve the Trinity UX and UI.
- Staged deployment: Onboard early users and roll out Trinity by gradually increasing the $TRI cap, as proposed below.
- Clarify legal and regulatory implications with the foundation board
- Onboard market makers and early partners
Voting:
- Approve spend of 120,000 USD worth of TRU to pay for an audit of Trinity with ChainSecurity
- Reject audit spend for Trinity