[TFIP-22] tfBILL v2 Grant Proposal: TrueFi Fee Switch & The Road to $100M+

Proposals
1

Hello everyone,

First off, we want to commend all of the major stakeholders of the TrueFi DAO for coming around to a peaceful resolution on the recent flurry of proposals. The board headed by @vandynathan and @ferengi has been instrumental in recovering from TrueFi’s loss of service providers and heralding a new strategic roadmap forward. We have always seen tfBILL as the primary capital formation tool for TrueFi to build around and have treated it as such - a public good for the ecosystem that enables a full suite of products such as CDP, stablecoins, and at some point cross-sell into higher margin private credit products. This vision is now becoming a reality.

We also want to commend the Cicada team (especially @CicadaSefton ) for representing the best interests of key service providers in the TrueFi ecosystem. At the end of the day we are all building real businesses on top of TrueFi’s innovative vault technology, we all want to see it become successful, and we are all aligned in our desire to operate in a stable environment. Cicada has filled an important role in the TrueFi ecosystem by providing a steady stream of borrowers to keep the private credit business alive in a post-Alameda world.

Executive Summary

  • Adapt3r proposes to waive its management fee, enabling the DAO to turn on the fee switch for tfBILL, immediately enabling the DAO to monetize the vast majority of its TVL.

  • We expect to receive significant investments into tfBILL over the next 6-9 months and are requesting funding to implement a defined set of requisite improvements to the product to secure these new investments and make the product more attractive for future investors.

  • Adapt3r has begun coordinating with Akemona and the Board to completely redesign tfBILL with significantly enhanced user experience, composability, and features that not only attract direct capital but also position future TrueFi products for success.

Context

Now that the board of TrueFi is being formalized, private credit has been revitalized, and a CDP is being built on top of tfBILL, we believe it is time to take care of the core financial primitive of TrueFi that composes the vast majority of its TVL. Simply put, none of this works if tfBILL cannot continuously improve and ultimately out-compete its peers.

For background, we had worked extensively with Wallfacer to ship tfBILL prior to their departure, utilizing Wallfacer’s dev talent and BD expertise to grow the product into what it is today. We could not have done it without them (shout out to @ryan.rodenbaugh and @tylerw )! This was crucial given our lack of resources, which we will dive into below. Now that Wallfacer has departed, tfBILL has been starved of resources right as the tokenized treasury space heats up and our competition, which is much more well-funded, is seeing their investments pay off.

We are now at a point where all of the marketing, business development, and engineering that we’ve lacked post-Wallfacer is causing tfBILL and TrueFi to fall behind. Rather than continuing to operate on a limited budget, we feel that it is time for the DAO to commit its resources to making the product as good as it can be.

Where have we gotten so far?

With a few people and an extremely limited amount of capital, we have been able to build, implement, market, and drive tfBILL into the largest TVL-contributor on the TrueFi protocol.

  • Adapt3r initially focused on regulatory compliance and investor protection, creating a legal structure that, although it was differentiated versus peers at the time, has now been adopted by Blackrock’s BUIDL, Centrifuge’s Anemoy Trust, and OpenEden’s TBILL.

  • Adapt3r then looked to implement compliant transferability, ultimately deciding that the most important decision was to wait until greater regulatory clarity could be reached - any other decision would have hindered tfBILL’s ability to onboard larger institutional investors. After extensively working with our legal counsel, we have found a number of solutions that we are excited to implement as part of the larger roadmap discussion below.

  • Adapt3r then improved the onboarding process, working with Archblock (our KYC provider) to streamline the process such that we can scale to B2B2C implementations (with one large fintech currently onboarding). Notably, we assume in our budget that we continue to use Archblock, but it should be noted that these services are being provided free of charge, and that in the future if we needed to expand our KYC/AML function there will be a cost.

  • Adapt3r then positioned tfBILL as the ultimate platform for stablecoin clientele by enabling a liquid backing, a network of broker-dealers, instant redemption functionality, and direct integrations with Blackrock. Although there is much more to do here on our roadmap, we have recently onboarded the fastest growing stablecoin in DeFi (more details to come) using this approach.

Candidly, we as a team have operated this business in a loss-making position for over a year. To date, Adapt3r has generated zero net income despite its contribution to the TrueFi ecosystem. Our long-term vision has always been to build and scale tfBILL into a leading tokenized T-Bill product that can simultaneously act as:

  1. A capital formation tool that attracts investors to TrueFi and allows cross-selling into higher margin private credit products
  2. A foundational/composable building block for the protocol that enables a full suite of future potential products such as CDP, stablecoins, etc
  3. A consistent revenue stream for the DAO

Our vision involves significant upgrades to the product and a better alignment of resources and funds to integrate tfBILL more directly into TrueFi’s architecture. To-date we’ve attempted to stretch the limited 0.3% management fee and small team to try and achieve this vision, but have come to the conclusion that we need to more fundamentally align the product buildout with the DAO to set ourselves and TrueFi up for future success while tfBILL scales. For context, all of TrueFi’s competition (Maple, Centrifuge, Ondo, Mountain, OpenEden, Hashnote, etc) have allocated significant resources at the DAO level to build out and market their treasury products. As we detail below, we see an opportunity to materially alter the way value flows in TrueFi for the better.

Planned Improvements

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Cost of Implementation

Here is what we need to complete our roadmap as well as maintain the existing product:

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In line with TFIP-19 and TFIP-21, we have already begun working with @vandynathan and @ferengi as well as @Ravi and the Akemona team to chart the most effective path forward on the collective roadmap and how to most efficiently use resources toward the future success of the DAO. We believe much of the engineering work and potentially some of the legal and business development work can be synergized with the recently passed budget by the Board. Any funds that ultimately can be covered by the outlays in TFIP-19 or TFIP-21, or are not ultimately needed, will be returned. Quarterly check-in calls will be held to review progress and use of funds and will be announced and recorded for all DAO members to participate in.

Proposal

As such, Adapt3r is requesting a total grant of 12.298M TRU to begin implementing our roadmap over the next 3 quarters. Of this total, we are requesting 6.0M TRU up front, with the remaining portion streamed over 9 months.

Adapt3r’s commitment to TrueFi:

  1. Adapt3r proposes to waive its management fee, enabling the DAO to turn on the fee switch for tfBILL, immediately enabling the DAO to monetize the vast majority of its TVL.
  2. The core product will retain TrueFi branding (“tfBILL”) for the duration of the agreement.
  3. Adapt3r will remain on TrueFi’s vault technology on an exclusive basis for the duration of the agreement.

Next Steps

As the proposal 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.

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As of September 30, 2024 5:10 EST, this proposal is posted for a 48-hour Snapshot vote. Here is the link: Snapshot

5

Couple of points:

  1. Have you thought about what will happen when rates get cut substantially over the coming year? How do you plan to expand TVL at that point? Do you have any other higher yield products that you will rolling out? Additionally, how do you plan to market to more traditional companies when they have access to treasury products at banks, etc with lower fees?
  2. The total comp seems extremely high especially for a product that has already been released. As a comparison, you are requesting twice the funds that Cicada currently gets. I think in general, compensation should be relatively similar given the workload laid out.
1 Like
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Hi @christiancicada - these are great questions. See below for responses:

  1. Have you thought about what will happen when rates get cut substantially over the coming year? How do you plan to expand TVL at that point? Do you have any other higher yield products that you will rolling out? Additionally, how do you plan to market to more traditional companies when they have access to treasury products at banks, etc with lower fees?

We have, of course, factored the path of future short-rates into our strategic vision for the product. There is a clear opportunity to provide a higher degree of utility to users than our competitors who have generally made TVL deals with market makers that are only possible in a high rate environment. Much of our capital pipeline and roadmap is currently geared towards DeFi integrations with top stablecoin protocols as well as banking and fintech products, something that we feel will set TrueFi apart and move us in the right direction. In fact, we expect to onboard a fintech in the near future that will integrate tfBILL as its core savings product in a B2B2C format. We see the future of stablecoins and tokenized treasuries heading in this direction, which is not dependent on high short-term rate “trades”.

Additionally, this product is a prerequisite to any CDP-style stablecoins built on top of TrueFi. This was a key aspect of Wallfacer’s Trinity roadmap, and is a core strategic focus of the current Board.

  1. The total comp seems extremely high especially for a product that has already been released. As a comparison, you are requesting twice the funds that Cicada currently gets. I think in general, compensation should be relatively similar given the workload laid out.

If you do the math on the annualized grants received by Cicada and Adapt3r historically relative to the TVL growth, amount of current and future fees to TrueFi DAO, and how the funds are being utilized, I think it will be next to impossible for you to come to the conclusion that this funding request is anything but fair. We are happy to go into a more in-depth comparison if you would like.

1 Like
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As of October 2, 2024 6:00pm EST, this proposal is posted for a 72-hour Tally vote. Voting will begin on October 4, 2024. Here is the link: Tally

8

I think this funding is overstated:

  1. There is no detailed breakdown of costs.
  2. 6 million TRU will be immediately transferred to stables and this will negatively affect the token.
  3. There are no incentives, which means that the team may not attract anything and DAO will still give away all 12 million. This should not be the case. Some funds are certainly needed right now, but some should definitely be given away only based on results.
  4. It is unclear what will happen in 9 months. Will there be another request for the same amount? The request already exceeds the annual profit from the 13 million USDC that the project has collected.
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@cp0x,

Apologies for delayed response on this. Please find our responses below:

  1. We fully appreciate the need for transparency in how the requested funds will be utilized, but feel that our original post sufficiently lays out costs and what we expect to accomplish with the requested budget. That said, we’re happy to answer any questions about any specific items in the roadmap/budget we provided in the original post.

  2. While we understand the concern about TRU price-impact, we think this concern is overstated for two main reasons:

  • At this point there is ample data to test the theory that TRU grants have a non-trivial, negative impact on the price of the token. In our opinion, it is clear that the data conclusively shows no significant relationship. For example, from October of 2023 to mid-July of 2024, over 50M TRU were allocated to various parties to fund DAO initiatives and incentives and the price of TRU was up over 350% during this period, outperforming many of its sector comps. General market direction and sentiment around the protocol, the latter of which is directly buoyed by promising roadmaps and developments like the ones laid out in TFIP-18, TFIP-19, TFIP-21, and TFIP-22, are much larger drivers of price.
  • TRU has relatively deep liquidity across a variety of CEXs and DEXs, with over $25M in average daily volume YTD. Any TRU that is sold into stables will be done via liquidity avenues that minimize price impact, whether that be OTC, CEX or DEX TWAP/VWAPs, etc. As TRU holders ourselves, we are aligned directly with the DAO both financially and strategically and the last thing we want is to put undue pressure on the TRU token. As stated in our original post, public quarterly calls will be held to review costs and progress on all of the roadmap and budget items.

  1. This is the reason that we are not receiving the full funding upfront and have opted to stream the remainder over the 9-month term, with quarterly calls to review progress. Our current funding plan provides the necessary resources upfront to execute our roadmap, which is crucial in the rapidly evolving competitive landscape of tokenized treasury products. Immediate access to the partial funds upfront allows us to accelerate development, secure top talent without delay, and negotiate better terms with service providers, ultimately saving time and money. We are committed to transparency and will provide regular quarterly updates to the community, detailing our progress, expenditures, and any adjustments to the roadmap.

  2. This proposal does not imply any future funding requests from the DAO. As it stands, this is a one-off grant request with the goal (as stated in the original post) to use the funds to make tfBILL a self-sustaining product that contributes long-term to the DAO’s revenue stream and serves as a strategic capital formation tool for other TrueFi products. The current request is intended to cover the development and improvements necessary to make tfBILL competitive and sustainable. As the equity owners of the entities providing the tfBILLs underlying services to the DAO, we are directly incentivized to grow TVL and improve the product long-term. While we reserve the right, as all service providers do, to request future grants, there is no expectation of such future funding tied to this proposal.

1 Like
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Update from Adapt3r

Dear TrueFi Community,

We are thrilled to announce that the recent proposal (TFIP-22) has passed, and we are immensely grateful for your support and confidence in our vision. We are excited about the work ahead and are eager to contribute to the continued growth and success of the TrueFi ecosystem.

Our roadmap is centered around a clear opportunity that we see to enhance user experience and introduce features that will not only meet but exceed the expectations of our community and investors. Our roadmap is ambitious yet achievable, and we are confident that it will enable TrueFi’s native treasury product to establish a strong competitive moat by anticipating and aligning with the future of DeFi. Specifically, we are focusing on:

  • Instantly Redeemable and Mintable tfBILL: Providing users with the flexibility to redeem and mint tfBILL tokens instantly, enhancing liquidity and user convenience.
  • Cross-Chain Compatibility: Expanding tfBILL’s interoperability across multiple blockchain networks to reach a broader audience and unlock new use cases.
  • Composability in DeFi: Ensuring tfBILL seamlessly integrates with other DeFi protocols, enabling sophisticated financial strategies and products.
  • Eligibility as Collateral: Positioning tfBILL to be accepted as collateral in both on-chain and off-chain financial services environments, increasing its utility and value proposition.
  • Fully Compliant Transferability: Enhancing compliance measures to allow tfBILL to be transferred securely and legally within various jurisdictions, attracting institutional investors.

We are also pleased to inform the DAO that we are in the final stages of completing the legal, technical, and marketing work required to remove the management fee. Our target deadline for this significant milestone is October 25th. This change will enable the DAO to activate the fee switch for tfBILL, turning it into a revenue-generating asset for the community.

Once again, thank you for your unwavering support. We are committed to transparency and will continue to keep you updated on our progress.

Warm regards,
The Adapt3r Team

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