[TFIP-23] TrueFi Operational Expense Request (Updated based on feedback)

Proposals
1

Context & Previous Budget Approval

In September 2024, the DAO approved under TFIP-19 a six-month budget of $1,175,000, based on an estimated annual operational cost of $2,100,000 under TFIP-19. This included:

  • $925,000 for operational expenses (half-year funding based on projected costs).
  • $250,000 for the Legal Reserve Fund (allocated for a full year).

Current Status & Budget Performance

  • The previous Legal Reserve Fund currently still has $125,000 remaining
  • We operated below the allocated budget for the initial six-month period, demonstrating our commitment to fiscal responsibility and strategic resource allocation. ($140,000)
  • A detailed financial report for Q4 2024 is already included in the TrueFi DAO 2025 Report.
  • Another DAO report is being prepared for Q1+Q2 results.

Budget – Financial Overview

  1. This proposal requests three months of operating expenses to support core functions such as governance, operational costs, and community initiatives. The budget accounts for the necessary funding to maintain operational stability and strategic development, with an estimated total of $497,000 for the upcoming 3 months.
  2. 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 account for price fluctuations before the TRU-to-USDC/USDT conversion.
  3. Any excess funds will be reported to the DAO at the end of the three months.

The purpose of this improvement proposal is to provide a use of funds to bridge the gap for the current operating team, and budget request for future improvements to the TrueFi ecosystem in three (3) main areas (I.e., product , business development, and protocol research). These improvements will be implemented across three (3) new workstreams:

  1. TrueFi Front-end Product Overhaul – UI and UX improvements to the front end product beyond aesthetics, as these changes directly impact user adoption, retention, and overall protocol efficiency.
  2. Research Analyst Hire (Part-Time) – A strategic force multiplier who enables marketing, business development, operations, and the community to work in sync via data dashboard creation and maintenance, product demos, content strategy execution, as an auxiliary generalist resource.
  3. Legal Support Overview – TrueFi is working on the full entity formation and legal structuring of Polaris. The projected legal costs for this initiative are approximately $100,000 with $50,000 allocated specifically to Winston & Strawn’s assistance, working in coordination with CFDB.
  4. Polaris - Continued Polaris development as we near targeted Q3 launch.

We are working with our agency partners (Flod) to deliver the designs and new branding which will be implemented on the TrueFi front end by Akemona. The current expiry for Akemona partnership is mid-Q2 2025 which aligns with when we plan to have all front end changes in production. We are highlighting the new branding and UI/UX via social media, coupled with long form research and blog posts.

A research analyst at this juncture will help with day to day support of long form content (Blog & RWA Protocol Research) as the broader team spins off to Polaris also assist with day to day TrueFi Foundation operations.

The team understands that Legal and Compliance make up a large portion of this request. With respect to legal and compliance fees, the team has been engaging best in class legal council as many legal decisions are not clear when engaging in innovation on the bleeding edge. We want to ensure we have the proper entity structure, governance, and documentation (E.g., Legal Opinions on the token) when setting up the Polaris entities as well as ongoing structuring of TrueFi. Otherwise, there might be unintended consequences on the backend we will end up paying for regardless. Winston & Strawn works closely with CFDB to support our initiatives. Both firms have been highly insightful and bring significant industry experience to the table. After a thorough review of dozens of firms, we engaged both based on their strong expertise.

To date, we have incurred approximately $30,000 in legal costs across Winston & Strawn, CFDB, and Mayer Brown.

  • We currently maintain a $10,000 retainer with Winston & Strawn.
  • We also have a $10,000 retainer with CFDB.

Mayer Brown was engaged in Q4 2024 to assist with TrueFi issuer work and regulatory compliance, totaling $10,500. Finally, TrueFi engaged Walkers in 2024 to provide legal advice during the DAO’s prior management transition and continued support through the change in leadership.

Polaris’ Benefit to TrueFi Ecosystem

The market cap of Usual Money ($USUAL) peaked at $667 M and if, in a conservative case, we scale to 25% of their market cap, Polaris market cap will be 166.75 M. TrueFi will receive a 10% allocation, roughly $16.675 M mark-to-market value generated for TrueFi holders.

Increased TVL numbers will boost TrueFi visibility on platforms like rwa.xyz and DefiLlama. Keep in mind, however, that this is solely from Polaris operations and the Foundation hopes to prioritize organic TVL growth in the near future, as well. TVL in the Credit Pools earns a higher fee for the TrueFi DAO.

We imagined a bear case where Polaris scaled to ~24% of Usual’s success in 6 months (Usual saw a high of $1.85 B). In the following scenario, at the 444M Polaris bear-case TVL, roughly 80% will go into the tfBill product, generating $25,500 in revenue for the DAO.

Estimated Budget in USD:

Position/Item Annual Quarter TrueFi Polaris*
Operations Head (x1) $150,000 $37,500 $0 $37,500
Product Manager (x1) $150,000 $37,500 $0 $37,500
Business Development (x1) $150,000 $37,500 $0 $37,500
Full Stack Engineers (x2) $400,000 $100,000 $0 $100,000
Marketer (x1) $100,000 $25,000 $25,000 $0
Directors Fees $120,000 $30,000 $30,000 $0
Research Analyst (x1) $36,000 $9,000 $9,000 $0
Community Moderator (x1) $3,000 $750 $750 $0
Designer (UI/UX) $108,000 $27,000 $27,000 $0
Operational Infrastructure $10,000 $2,500 $0 $2,500
Team Travel $36,000 $9,000 $0 $9,000
Marketing/PR $35,000 $8,750 $8,750 $0
Events $40,000 $10,000 $0 $10,000
Legal and Compliance $500,000 $125,000 $25,000 $100,000
Financial Admin and Audit $150,000 $37,000 $37,000 $0
Total Expenses $497,000 $163,000 $334,000

*Note on Polaris Costs

There would be a loan structure where TrueFi recoups the full development cost of Polaris, as well as 10% of token supply on top of this. We feel this is in line with the risk being taken by the DAO and should not only provide liquid capital in terms of loan repayment to TrueFi but also generate significant upside for token holders and the DAO.

Breakdown by Cost Center is as Follows:

Cost Center Q2 2025
Finance $37,500
Legal and Compliance $125,000
Managing Operational and Business Development Costs $281,000
Marketing and Community Management, Community Team Onboarding, and Social (IRL) Outreach $44,500
Team Travel for Regional Representation $9,000
Legal Reserve Fund N/A
Investment Vehicle Creation N/A
Projected Operational Cost $497,000

This budget ensures continuity of operations while maintaining cost discipline and alignment with previously approved financial plans.

We are working with our agency partners (Flod) to deliver the designs and new branding which will be implemented on the TrueFi front end by Akemona. The current expiry for Akemona partnership is mid-Q2 2025 which aligns with when we plan to have all front end changes in production. We are highlighting the new branding and UI/UX via social media, coupled with long form research.

We also expect a reduction in operational overhead as Polaris development separates into its own entity. For the development funded pre-seperation, there is a loan agreement with Polaris to repay the DAO for the cost of incubation. The majority of the team is not in the United States, and we will be prioritizing lower cost-of-living geographies as we grow into a steady state.

Projected Operational Cost $497,000
Reallocation from the TFIP-19 -$140,000
Budget Funding request $357,000
~30% earmark $107,100
Total Funding request $464,100
TRU price $0,02708
TRU minting request ~17,138,200 TRU

TrueFi & Polaris Budget Proposal KPIs

TrueFi Product/Engineering

  • Continue to expand TrueFi offerings on new ecosystems and DeFi integrations
    • KPI: 3 bluechip DeFi integrations for tfBills and vault aggregator integrations for Lending Pools
    • Timeline: Q2
  • TrueFI Core Product Overhaul
    • UI/UX Overhaul
      • KPI: UI/UX modifications deployed to production
      • Timeline: Mid Q2
    • Tighter Adapter tfBill integration
      • KPI: As part of UI/UX integrations mint and redeem for tfBills prominently displayed on the homepage
      • Timeline: Mid Q2
  • Grow community Engagement and marketing impact through data-driven strategies
    • KPI: 1 long form monthly blogpost and increase engagement on X by 25% (Likes, Comments, and Reposts)
    • Timeline: End of Q2

Polaris

  • Successful spin-out and launch of Polaris
    • Polaris fundraise and spinout
      • KPI: Successful VC Fundraise of goal amount and Entity Seperation
      • Timeline: Early Q2
    • Polaris Security Audits
      • KPI: Multiple Successful Security Audits of Polaris Codebase
      • Timeline: Mid/Late Q2

Goals Enabled by TFIP-23

  1. TVL Growth: There will be incentives on TrueFi TVL through ecosystem partner incentives. For example, a potential tfBill points program/Polaris points program. Increased TVL of both tfBill and Polaris will directly flow through TrueFi infrastructure.
  2. TRU Token: Polaris TVL will be routed through TrueFi infrastructure, generating fee revenue and increasing TVL for the TrueFi protocol. In addition, there will be a Polaris Token distribution for the TrueFi Ecosystem. More information will be shared on this in the coming months.
  3. Polaris & TrueFi: Polaris is aiming to be a regulatory compliant yield-bearing stablecoin. In maintaining airtight compliance, operations on the stablecoin and other aspects of TrueFi’s business will not be co-mingled. Again, Polaris is being built within the TrueFi ecosystem, and Polaris TVL will flow through TrueFi’s permissionless infrastructure, increasing TVL for TrueFi.
  4. DeFi Integrations: As we finalize partnerships, we will make public announcements on them. We can reveal that we are in the process of working with Morpho on an official tfBill/TrueFi partnership. Again, more to come on this soon.
  5. UI/UX Updates: Currently, the user flow for interacting with TrueFi’s Lending Pools and tfBills is highly disjointed. The team, in conjunction with FLOD, is working on a complete front-end product overhaul that will reduce friction for depositing TVL into TrueFi. We will share sneak peaks with the community in the coming weeks.
  6. Finance team: Between Q4 2024 and Q1 2025, the financial team delivered on core reporting, treasury, and compliance objectives—submitting the 2023 AFR, implementing crypto-to-fiat payment rails, and supporting the Plume integration. TrueFi now operates with full financial autonomy, no longer reliant on Archblock for payments. Looking ahead to Q2–Q3 2025, we aim to continue internal reporting, forecasting, and budget execution while preparing the 2024 AFR under BVI compliance. Ongoing budget support remains critical to maintain continuity and uphold strong, decentralized financial governance.

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.

2 Likes
2

Thank you for the updated proposal, @kelvinsparks.

Could you please advise if there have been any discussions regarding the following point?

If so, what was the outcome of those discussions?

Appreciate your time—thank you.

4

Hello StrategoHoldings! Thank you for your feedback. We’ve considered the possibility of mandating TRU as part of total compensation packages. Ultimately, we decided against required TRU allocation, instead heavily encouraging personal allocation, as there are several challenges with the former.

The volatility of TRU token creates risk for at least one party and - depending on who takes on the risk - has negative ramifications. If TrueFi takes on the risk, and promises a $ value, salary payouts could vary greatly from budgeted amounts. If employees take on the risk, salaries may be a fraction of what employees are promised.

Typically, with token compensation - employees take on the risk, and salaries are much higher to compensate for this increased risk/skin in the game. Unfortunately, salaries are already below market rate, and we will not be able to increase salaries to compensate employees for increased market risk.

There is a culture of skin in the game, as mentioned earlier, and all folks on the team are heavily encouraged to diversify into TRU. They may not stake, however, as team members do not vote to minimize governance interference.

5

Thanks for the reply. But ultimately, taking the risk is the point—it’s how confidence in one’s efforts, belief in the mission, and alignment with long-term success are shown.

By taking TRU as part of their compensation, team members aren’t just accepting tokens—they’re making a personal investment in the project and themselves. It signals real commitment and belief in TrueFi’s future.

It’s no different from when someone builds a business or a company using their own funds: they invest in themselves because they believe in their own ability to build something successful. That same mindset applies here.

After all, why do investors invest? They take on risk because they believe in the upside, in the mission, and in the team’s ability to execute.

And just because someone stakes TRU doesn’t mean they are required to vote; staking can simply be a way to align with the protocol’s success without interfering in governance decisions, maintaining neutrality while still showing skin in the game.

2 Likes
6

Why It Makes Sense to Pay TrueFi Core Contributors Partly in TRU

TrueFi, while having hired in-house service providers, can still benefit from adopting a contributor compensation model similar to Aave’s, where core contributors are compensated with the project’s native token, TRU.

Although Aave is a much higher-profile DeFi project, its approach to paying contributors in AAVE has proven to align incentives, foster long-term commitment, and strengthen governance.

By compensating TrueFi’s in-house service providers and core team with TRU, the protocol can:

  • Align incentives – Contributors become stakeholders in the protocol, motivating them to work towards the protocol’s long-term success.
  • Promote long-term thinking – Paying in TRU encourages contributors to focus on sustainable growth, as their rewards are tied to the protocol’s success.
  • Strengthen governance – Holding TRU tokens grants contributors a voice in governance, ensuring they are actively engaged in key decisions. However, in-house service providers would not vote on governance proposals that they are directly involved in, maintaining the integrity of the decision-making process.
  • Conserve treasury – Compensating in TRU reduces the need for stablecoin outflows, helping preserve the protocol’s runway and reinforcing the token’s value.

How AAVE Token Vesting for Core Contributors Works:

Core contributors at Aave are compensated with AAVE tokens, but these tokens are not immediately available. Instead, they are subject to a vesting schedule, typically spanning several years (for example, 1-4 years). This gradual vesting ensures that contributors remain engaged with the protocol over the long term and don’t simply cash out immediately.

Purpose of Vesting:

The vesting mechanism serves to align the interests of contributors with the long-term success of the protocol. It ensures that contributors stay active within the ecosystem and incentivises them to continue making meaningful contributions over time. Additionally, vesting prevents immediate selling pressure, helping to stabilise the token’s price in the market.

Locking Mechanism:

Some AAVE tokens are also subject to a lock-up period, where they cannot be sold or transferred. This lock-up period, embedded in the vesting contract, serves as an additional safeguard against immediate market sell-offs, further protecting the token’s value and stabilising its price.

Why TrueFi Should Consider Vesting for TRU:

Adopting a similar vesting and lock-up structure for TRU would ensure that TrueFi’s core contributors are incentivised to stay committed to the protocol’s success over the long term. It would also prevent large sell-offs and promote stability within the token’s market price, further enhancing the tokenomics of TrueFi.

While TrueFi is smaller in scale than Aave, implementing such a compensation model would help attract and retain top talent, align their interests with the protocol’s long-term growth, and strengthen the overall sustainability and governance of TrueFi.

If the structure works for AAVE, it could be a solid model for TRU too, right?

The Aave tokenomics structure, including the compensation and vesting system for core contributors, was primarily designed and implemented by Aave’s core team in collaboration with the community, especially through Aave’s decentralised governance.

7

Thanks again for yet another well-thought-out post! You’re on a roll.

The idea of incorporating TRU-based compensation with a proper vesting and lock-up structure makes a lot of sense in the long term. It aligns incentives, reduces treasury outflows, and strengthens contributor engagement in governance — especially when designed well, as we’ve seen with successful protocols like Aave.

We’ve definitely discussed this internally, and it’s part of the longer-term roadmap we’re exploring. That said, the immediate priority is executing on Polaris, which we believe is critical to putting the protocol on a sustainable footing. Once that’s live, the team will be significantly leaner, and the Foundation/DAO will be in a much stronger position to pivot toward a structured contributor comp model — one that includes token-based incentives, governance participation, and longer-term alignment mechanisms.

A few things to keep in mind in the interim:

  • The team is already operating lean, and current salaries are relatively modest — especially when benchmarked against NYC market rates, where much of the team is based. We’ve been intentional about making sure contributors are paid enough to cover their basic needs while keeping overall spend efficient.
  • Location is definitely something to revisit in the future, but I’d caution against over-complicating things at this juncture. As someone who’s spent a career in TradFi and participated in several ESOPs, I can say with confidence that aligned compensation structures work — and you’re absolutely right about the value of creating a sense of ownership. That said, we have a small team working full tilt on a turnaround, and it just so happens they live in two of the world’s most expensive cities (NYC and Dubai). While we could add TRU to their comp now, doing so would go against our guiding principle of keeping costs down.
  • It’s also worth noting that Polaris is deeply intertwined with the future of TrueFi, so the team’s incentives are already aligned with long-term protocol success, even beyond token comp.
  • While TRU-based compensation could be added in the near future, we want to avoid introducing complexity or token pressure before Polaris has had time to gain traction.
  • Longer-term alignment — including vesting and appropriate governance participation — is definitely part of the post-Polaris vision, once we’ve stabilized operations and built broader consensus around sustainability.

So, in short: we’re aligned on the direction — we just need to sequence it appropriately. First, focus on delivering Polaris. Then, revisit contributor compensation with the community and design something that fits TrueFi’s size, maturity, and goals.

Appreciate the push — and genuinely looking forward to continuing this conversation with the community.

— Seb

3 Likes
8

Thanks Seb✌️

I’m fully on board with this approach now that we’ve had the chance to talk it through and I’ve been able to voice my questions and concerns.

I’ll admit, I didn’t initially realise from the original proposal that TrueFi would be taking a back seat in the process—but I understand it now. Priorities shift as ideas evolve, and for Polaris to succeed, it clearly needs to take the lead at this time.

Focusing on delivering Polaris first is a sensible move. Once that solid foundation is in place, we’ll be in a much stronger position to drive both Polaris and TrueFi forward together, with shared momentum and purpose.

That said, once we’re through this phase, I’d really like to see a clear and well-structured roadmap for TrueFi—particularly in terms of its governance and tokenomics. These will be vital for the protocol’s long-term sustainability and success.

I appreciate the transparency and the opportunity to keep this conversation going. The proposal definitely has my vote, and I’m genuinely excited to see the continued growth of both Polaris and TrueFi.

3 Likes
9

Did I read correctly that operational expenses for the next 6 months have been voted against? And that a single wallet has more than 50% of Truefi ?

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10

Is there a member of the TrueFi board who is not also involved in Polaris who can be a neutral arbiter of the agreement? What are the key terms of the agreement. While I wouldn’t expect you to share the whole agreeement (though realistically, there shouldn’t be anything confidential so maybe you can), but at the very least..

Please restate what the exact amount TrueFi can expect to recoup (in USD terms or TRU) and by when. If e.g., the price of TRU were to 3x in the next few months, will the DAO be repaid in TRU or at a USD price, if so… what price?

really? it will be?

Since I did not see it mentioned anywhere, these tokens will be… unlocked/no vesting? or what?

And just to restate here, there is no additional terms on this? e.g., If the token supply of Polaris is 1bn, TrueFi DAO gets 100mm sent to the DAO?

3 Likes
11

With the exception of Ferengi, the Board is all independent and Ferengi has recused himself from Polaris-related discusssions that aren’t simply information gathering.

The plan is to repay the initial investment to TrueFi in stables, which should provide a healthy runway for the go-forward Foundation to execute it’s sustainability strategy (more on this in due time).

The DAO will also receive 10% of the Polaris Project’s native token. This will be based on supply, rather than value, but effectively the same thing. For example, if there’s a total supply of 1 billion tokens, then the DAO will be awarded 100 million of these tokens. These will have a vesting schedule and disbursements/sales/investments will be voted upon. There will also be provisions that will allow the DAO to act opporunistically to take advantage of crypto’s volatility. The parameters aren’t set, but think of it like, if the Polaris Project’s governance token jumps to $1B, then the DAO will be allowed to sell some of its allocation early. Again, these figures are purely illustrative at this point.

3 Likes
12

The arrangement required to much trust. Can anyone explain why TruDao wouldn’t own Polaris in full? Why are funding it to be “paid back” and 10%?

Btw. The going rate for these type of deals is 20%

Ferengi recusing himself? I don’t trust that and no one should be asked to trust that.

One wallet holds 50% of Tru? That’s not decentralized. So how is Tru a DAO?

I smell a OM mantra situation where ONE WALLET can bring the entire thing down in a few hours time.