Background:
TrueFi was originally an ecosystem built around the stablecoin TUSD as one of the first stablecoins in crypto from the 2017/2018 vintage. In 2020, TrueFi pivoted as an ecosystem to house credit-related vaults and these vaults allowed for borrowers (mainly crypto trading firms) to interact with lenders for stablecoin funds. By 2022 it was one of the largest protocols of its kind with peers like Maple Finance and Clearpool. However, from spring to winter 2022, saw a near annihilation of these credit-linked markets with bankruptcies such as 3AC, Celsius, Babel, Orthogonal, and Alameda/FTX. Many of these have also been tied with strong accusations of fraud and misrepresentation to its now claimants. TrueFi’s active TVL shrank to near zero by early 2023.
Since about September 2023, Truefi (or its vaults) have been used for the following, with a Real World Asset (“RWA”) theme:
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Adapt3r Whitelisted T-Bill Vault (housed at app.archblock.com): 13.5 million USD
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Kryptonim Whitelisted Credit: 0.5 million USD
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Gravity Team/Wincent/Fasanara (Cicada related): 2.1 million USD
Revenues that have been generated or collected from the vaults are currently at sub few thousand dollars.
Yet, hundreds of thousands of dollars (in fact, millions) of value in stablecoins and Tru tokens have been paid out to develop the vault technology and on efforts to bring users to the platform.
Nonetheless, The DAO has an opportunity to take a competitive segment of the RWA market, and we are already excited by the discussions that we have had with service providers. TrueFi has the name, product, and partners to evolve in the right direction.
Moving Forward - Strategy:
While RWA has immense potential in its next iterations to come there are many question marks just how the adoption will look like and more importantly when it will come.
How to deal with the uncertainty? The first solution is to build and house products that allow for enhancing the user experience with RWA brought on-chain but are also not RWA-exclusive. Before, Truefi was considered a CeDeFi protocol and with loan managers and such, there was a emphasis on the Ce (Centralised) portion, but now for flexibility, there’s much merit to place more emphasis on the De (decentralised) portion.
The board has thought of plans to create enhanced versions of innovative products that can fit the bill, with manageable costs to build it. As the plans may be materially economically impactful, specific plans are yet to be divulged. Through the onboarded members of the Foundaiton we will construct a more detailed roadmap that will encompass this vision.
We have already been connecting with strategic investors and partners to curate this roadmap, and the board is keen and open to working with any and new counterparts especially in RWA to find/create ecosystems that can net or potentially can net significant value and utility for TRU holders.
Of course, we need to find ways to revive the community. Forum participants are limited. Discord has been turned off for discussion. Twitter has been at a standstill. We want to revive these and revive the awareness of Truefi to the crypto community.
Treasury of the DAO must also be actively managed as well, as expenses are borne in USD (or stablecoin equivalent) and there is uncertainty of payments with TRU price fluctuations. The current treasury looks to consist mostly of yet to be minted Truefi tokens and gives rise to significant payment premiums potentially paid to counterparts and service providers.
Next Steps:
Starting on the right footing
The DAO (and the foundation as a BVI entity) should gain some legal clarity on its activities. What is viewed as grey, white, or black zones would be helpful. Legal advice should be sought for its current state and help set guidelines for future activities. We have already had advice set for some counterparty onboarding (“KYC”) and anti-money laundering procedures.
The DAO also should seek to get an update of the financial standing both from a historical and current perspective. For example, versus how much of tokens being expended, how much revenue is being collected. There is also looking at how to deal with legacy assets such as funds in vaults potentially.
The DAO Foundation should also ensure that assets that belong to the DAO and in the name of the Foundation have been properly handed over. These assets include multi-signature wallets and its assets, vault operations, websites and social media channels. These are noted on the following Tally votes:
But this is not an exhaustive list of items that would need to be audited or be in a handover process of the DAO and in the name of the Foundation.
Expanding headcount and outsourcing for the benefit of DAO stakeholders:
Currently, there are only the 2 directors, Ferengi and Nathan on the payroll as the Foundation Directors alongside the 2 community moderators. Cicada as a borrower introducer is the only other entity being paid as Wallfacer has not had a 2H 2024 contract passed by vote. Expenses are required for:
- Legal Advice from Outside BVI Counsel
- On-chain and financial auditing
- Additional Community or Outreach person
- Operations and Administrative Coordinator
- Day to day website user interface (“UI”) and user experience (“UX”) tech managers
- Smart contract maintenance (could be in conjunction with 5)
- New product development from technology standpoint
- New product or counterparts liaison specialist
- Compliance related personnel (from onboarding service providers, projects, and making sure that the DAO Foundation acts in a compliant manner)
- Additional directors
Of course, there are significant costs to this to get on the right footing and to start expanding. More details on activities to be pursued are also noted on the budget below.
Budget – Financial Overview
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6 months of operating expenses, covering essential areas like governance, operational costs, and community initiatives. The proposal also includes setting a budget for future expenses and strategic development at an estimated 1,175,000 USD
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The proposed budget will take a ~30% earmark in TRU’s token price at the execution of the proposal before being swapped into stablecoins. This is to consider price fluctuations before the TRU to USDC/USDT conversion.
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A multi-signature wallet will be created and owned by the Directors to manage this before we directly manage service provider operational costs through a bank account
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Any excess funds will be reported to the DAO at the end of the six months
Financial Operations
- Objective: There is no periodic reporting on the revenues and costs of the DAO. The goal would be to onboard a new financial professional(s) or provide working capital to assist with financial audits, treasury management, tokenomics, and the obligated 2023 Annual Financial Return (AFR).
Next Steps:
- Onboard a professional financial expert to manage this process.
- Investigate the 5M TRU in the multi-sig distributors’ wallet to assess its recoverability.
- Treasury diversification management
- Open EQI bank account and take over payments for service provider
- Complete the community-requested audit as detailed in the proposal TFIP-8.
Proposed Budget: 100,000 USD annually, covering salary, benefits, and associated costs for Financial Operations.
2. Legal and Compliance Process
- Objective: Major shortages exist in legal operational resources required to scale TrueFi’s offering and manage gaps in the legal process for certain products. It’s important to update legal processes, including hiring, developing the reclamation process, and borrower onboarding procedures.
Next Steps:
- Create a legal and compliance structure that includes contract drafting, onboarding service providers, legal research, corporate structuring, and the reclamation process including sourcing a law firm on retainer and managing the retainer with Walkers (our BVI counsel).
Proposed Budget: 250,000 USD for legal fees and compliance restructuring for Legal.
3. Managing Operational and Business Development Costs (In US $)
- Objective: Multiple service providers exist in the TrueFi DAO who have been rather successfully supporting the DAO. During this transition, we will support the DAO in managing the competitive bids from business and technical providers (including Cicada Partners, Adapt3r, Wallfacer, Teragon etc) and create a roadmap and operational model where the development is aligned with business and revenue expectations
Next Steps:
- Ensure business continuity for TrueFi’s core products through a bidding process of service providers
- Oversee the onboarding, purchasing of technology, and integration of technical providers into an integrated product.
- Drive both lender and borrower KPIs
- Look to retain an institutional business development personnel to expand TVL and revenue
Head of Operations x1 $150,000 (1 person at $150,000)
Product Manager x1 $120,000 (1 person at $120,000)
BD x2 $200,000 (Up to 2 persons at about $100,000 each)
Full stack engineers x2 $360,000 (Up to 2 full stack senior engineers at $180,000 each)
Two Junior engineers x2 $180,000 (Up to 2 junior engineers at $90,000 each)
Legal Operations: x1 $180,000
4. Marketing and Community Management, Community Team Onboarding, and Social (IRL) Outreach
- Objective: Following the transfer of social media platforms to the Foundation, the goal is to ensure proper representation of TrueFi and its products on all relevantrelevantat events and social platforms
Next Steps:
- Securely hold and manage TrueFi social media accounts
- Strategize a marketing and social media strategy to align with current and future TrueFi products and projects
- Hire a social media manager to manage and execute the process
- Agree with the proposal and discuss implementing Discord as part of the second-half-year plan.
Proposed Budget: 75,000 USD for current moderators, team expansion, and event participation.
5. Team Travel for Regional Representation
- Objective: TrueFi needs to expand its market share, mindshare and have a strong presence in network-building conferences globally. This goal is to allocate a travel budget for the TrueFi DAO.
Next Steps:
- Include the travel budget in the overall compensation plan for the DAO.
Proposed Budget: 25,000 USD for travel expenses.
6. Legal Reserve Fund
- Objective: TrueFi will need an amount of reserve to deal with potential unknown legal issues with funds in reserve un-hindered by a DAO Tally vote for funding.
Proposed Reserve: 250,000 USD for legal reserves.
7. Investment Vehicle Creation
- Objective: TrueFi has the opportunity to establish an investment vehicle focused on other projects involved in Real World Assets (RWA) and other dapps to that Truefi can invest into to expand its network and token utility. The use of such investments may enhance the reputational value of TRU and its network and affect projects - leveraging on its long legacy and its Binance listing.
Next Steps:
- Assess whether this investment vehicle opportunity can be a value-add to TrueFi with the legal, business, and governance framework requirement
In a chart form of estimated costs:
| Estimated Budget in USD | |
|---|---|
| Position/Item | Annual |
| Financial Admin and Audit | 100,000 |
| Legal and Compliance External | 250,000 |
| Operations and Ecosystem Development | |
| Operations Head (x1) | 160,000 |
| Product Manager (x1) | 120,000 |
| Business Development (x2) | 200,000 |
| Full Stack Engineers (x2) | 360,000 |
| Junior Engineers (x2) | 180,000 |
| Legal Operations / Internal Counsel (x1) | 180,000 |
| Community Outreach Manager | 75,000 |
| Team Travel | 25,000 |
| Investment Vehicle (SAFT investments etc) | 50,000 |
| Directors Fees | 150,000 |
| Total Expenses | 1,850,000 |
| Legal Reserve | 250,000 |
| Total USD Stables Estimated | 2,100,000 |
| Half Year (full draw for legal reserve) | 1,175,000 |
Next Governance Steps
As the proposals does not fall under the simplified governance exemptions, the proposal will require the following steps:
1. Forum Posting: A 72-hour posting period on the forum to allow the community to provide feedback.
2. Snapshot Vote: A 48-hour Snapshot vote will be conducted with the options: “OK to vote on Tally,” “Not OK to vote on Tally,” and “Abstain.” At least 5% of staked TRU must participate in this Snapshot vote to meet the quorum.
3. Amendment Period: If the 5% quorum is met, with a majority negative vote, a 72-hour period will follow to allow for any amendments or discussions before the proposal is posted to Tally.
4. Tally Vote: Otherwise, the proposal will be posted to Tally for the final vote.