TrustToken Asset Management Borrow Request

Hello all,

We are all focused together on one big goal: making TrueFi the protocol for global lending. We see this as the trillion-dollar opportunity in front of us.

To scale to that lofty goal, we’ve been focused on building and growing institutional-focused loan portfolios on top of the protocol. We are working hard behind the scenes to ensure the protocol can support these portfolios, and we’re having discussions with a number of exciting participants. This will ultimately give our lenders a variety of risk and reward portfolios to choose from, increase TrueFi’s Total Value Locked, and drive value for TRU.

After discussion with many asset managers, end borrowers, and institutional lenders, we have learned a lot about the requirements the protocol will need to satisfy. To get this right, we are prototyping a new version of the lending pool, which we are now calling a “portfolio.” This first portfolio will be focused on B2B lending, which has a good risk-adjusted return, and where we have several companies lined up to borrow. To manage this portfolio, and prototype the idea of a third-party asset manager, we have designated a separate group within TrustToken as TrustToken Asset Management (“TAM”). TAM will be using a proprietary credit and underwriting model to manage this portfolio.

We’d like the USDC pool to be one of our first lenders.

The Borrow Request

TrustToken Asset Management would like to request a $2 million loan from the USDC pool for 180 days. We will pay at least 8% interest on the loan. We say “at least” because we view this as the USDC pool lending into the B2B portfolio, and our loan strategy may actually pay a higher coupon, which will be passed back to the lenders, including the USDC pool. As we grow this portfolio, we will incorporate other lenders who pass KYC. To that end, this new portfolio will be listed on the Lend page, with a link that allows potential lenders to express interest in joining. Ultimately as new portfolios are created, TrueFi governance will decide which portfolios get listed on the Lend page of app.truefi.io.

This request will be a departure from the usual TrueFi loan strategy to delta-neutral hedge funds and crypto market makers. TrustToken has the assets and track record to be a good credit risk, so TAM will be given a TrueFi credit score and pass through the underwriting process, but obviously we’re not unbiased. We realize it’s a little unusual, but we strongly believe that “eating our own dogfood” this way is the best way for us to exercise the new portfolio structure.

The B2B Lending Portfolio

This initial B2B Lending Portfolio will be managed by TrustToken Asset Management, which is a group of TrustToken employees. As in TradFi, the asset manager will be collecting a 1% management fee on funds at work. Unlike the current pools, this portfolio will also pay a protocol fee of 0.5% on funds at work, paid directly to the TrueFi community treasury. The loans in this portfolio are NOT directly protected by the SAFU, and thus TRU stakers are not subject to slashing if these loans default.

To be clear, the $2m loan that is initially made from the TrueFi USDC pool to TAM will be subject to the same protocol rules as any other loan from a TrueFi pool: it will pay the TRU stakers, and if TrustToken Asset Management doesn’t repay this loan, it would be subject to the SAFU, and likely TrustToken would never get another loan.

Conclusion

We believe the creation and seeding of new institutional-focused loan portfolios is essential to the growth of the TrueFi protocol, and one of the most important things that the community can support. This is a preview of what we expect will be a much longer set of discussions and communications about the TrueFi protocol roadmap, and what kinds of portfolios it will support.

We welcome opportunities and ideas from our community to further diversify into new asset classes. These experiments will help design bespoke portfolios for these types of assets, which TrueFi lenders can then gain exposure to separately. We can also ensure the protocol evolves to be flexible and general enough to support these new end markets.

We very much appreciate your support in seeding this new portfolio. We strongly believe this is the right first step in scaling the protocol to a trillion dollars. Let us know your thoughts!

-ts-
Tom Shields
Chief Strategy Officer, TrustToken

3 Likes

I support this - Portfolios are the future of TrueFi and creating this first Portfolio as a proof-of-concept will open opportunities for future portfolios. If portfolio fees are used to buy & burn TRU, this can benefit all TRU holders.

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Thanks very much for posting this Tom. For everyone’s context, this is a key first step we’re taking towards a major upgrade of the protocol. We need to become a protocol that will attract the best asset managers to come on board and build new Portfolios. This first step will let us prototype how these Portfolios will work before opening up the platform to more and more Portfolio creators.

We believe making this transition over the coming months will be key to enabling the protocol to scale from 1Bn to 100Bn+.

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You gotta meet Des! Former BNY Mellon and Bridgewater, launched something in asset mgmt X crypto recently. Will intro