Introducing Repayment-Free Loans
TrueFi’s Pioneers the Next Paradigm of DeFi Lending — Again
Phase 1: In November 2020, TrueFi originated the first ever on-chain unsecured loan. This first phase of the protocol saw the growth of TrueFi-operated stablecoin pools, largely lending to crypto-native institutions. Since then, TrueFi has become the leading protocol for unsecured loans, completing over $1.25b in originations with no defaults to date, across 117 loans.
Phase 2: In January 2021, TrustToken announced our partnership with delt.ai, the first of now many portfolio partners to bring their non-crypto lending book on-chain as part of the TrueFi Lending Marketplace. Since then, TrueFi has become home to an ever more diverse array of financial opportunities, from B2B debt financing in emerging markets, to protocol-to-protocol lending, to single borrower pools designed for our most creditworthy borrowers.
If Phase 1 was the launch of a new operating system for lending, Phase 2 is most definitely the launch of an app store — host to a growing pool of portfolio managers, delivering a vast array of financial opportunities.
Today, with all we’ve learned from the front lines of DeFi, we’re happy to unveil Phase 3 of TrueFi: the launch of repayment-free loans, starting with an experimental portfolio capped at $250m today, April 1st, 2022.
Read on to learn more about why and how TrueFi is running this experiment, who’s eligible for a share of the portfolio, and how to apply to the first batch of loans.
What & Why: Repayment-Free Loans
Repayment-Free Loans are, in many ways, a natural culmination of the best parts of DeFi: accessibility, permissionlessness, and, of course, attractive returns.
As we learned during the operation of our stablecoin products, and during the onboarding of lenders and borrowers to TrueFi, bringing traditional credit products on-chain is hard. This is true not just for our incredible engineering and product teams, but also for borrowers who go through rigorous vetting before getting access to an appropriate amount of capital, as well as lenders, who are expected to do their own research on the risks and returns of every portfolio in which they participate.
Repayment-Free Loans don’t just solve for friction and accessibility, but also allow TrueFi to reach an entirely new class of borrowers, all while offering lenders perfectly predictable returns*, eliminating the need for due diligence.
In detail, here’s the three biggest reasons why TrueFi is launching this revolutionary new product:
1: Expanded market accessibility
Repayment-Free Loans allow TrueFi to grow its reach to a borrower market that’s been previously impossible to to serve: individual retail lenders. Because retail lenders are difficult to assess for creditworthiness, do not command the loan size that generates attractive portfolio returns, and are nearly impossible to pursue for collections in case of default, TrueFi has chosen not to serve this audience — until now.
By allowing nearly any business and individual to receive a Repayment-Free Loan, unhindered by the standard blockers that would bar them from receiving TrueFi loans (i.e. having negative on-hand collateral), TrueFi will now be able to maximize the accessibility of the protocol to all people, everywhere. Truly, this is a crypto dream realized.
2: Reduce borrower & lender friction
TrueFi’s present system of assessing borrower eligibility is rigorous, comprehensive, and demands a strong relationship of trust and communication between the protocol’s lenders, borrowers, and credit assessors. Unfortunately, such a meticulous process naturally introduces friction for both lenders and borrowers, demanding each engage in due diligence that slows the flow of funds. While TrueFi’s system of checks and balances has thus far been perfectly successful in preventing default, it cannot be ignored that credit checks, contract signoff, and in fact, communication at all simply slow crypto down to the speed of people.
Repayment-Free Loans, finally, allow nearly any borrower to access TrueFi’s maximally capital-efficient loans, requiring zero capital lockup, at the full speed of the blockchain, and requiring zero capital repayment.
We’re proud of this new crypto paradigm, and can’t wait to see it become a core DeFi building block.
3: Maximized marketing visibility
After more than 5 years deeply enmeshed in the DeFi industry — both due to operating the popular TUSD stablecoin, as well as serving both lenders and borrowers with the launch of TrueFi — we’ve come to understand a great deal about the industry’s most effective marketing mechanics. Like PayPal, Coinbase, Compound, and most of today’s DeFi leading contemporaries, the truth is clear: giving away free money is a really popular marketing mechanic.
With Repayment-Free Loans, we’ve eliminated the complexities and regulatory challenges of yield farming, airdrops, token grants, bounties et all — and are building a relationship directly with our users, one-by-one, using the most reliable, battle-tested trick in the marketing playbook.
The trick is giving away money.
Who & When: Eligibility & Application Workflow
Because Repayment-Free Loans aren’t constrained by a borrower’s creditworthiness, conceivably any business may apply for up to $50,000, and any individual may apply for up to $5,000.
TrueFi will accept submissions from 12:00 PM ET April 1st, 2022, until the first tranche of the $250m allotted portfolio is fully disbursed.
To narrow TrueFi’s first Repayment-Free Loan disbursements, we invite the TrueFi DAO to consider nominations submitted to the TrueFi Twitter account with the following terms:
- Any Twitter account many apply for a Repayment-Free Loan by following TrueFi on Twitter, but must indicate in a Tweet whether they are applying as an Individual or a Business. If applying as a business, you must indicate the name of the business entity receiving the loan.
- The Tweet must contain a link to this Medium post, so that this opportunity may find the greatest possible impact, as well as the hashtag #TrueFi
- Remember that today is April 1st, 2022, dating back to as early as 1582 as a day of pranks, and that this product is, too, a joke. Hope you had a laugh!
Link to story: https://blog.trusttoken.com/introducing-repayment-free-loans-fa430ab475c1
With that, good luck, and thanks for joining all of us at TrueFi in launching a new DeFi paradigm — again.
*: Repayment-Free Loans eliminate the requirement on borrowers to pay back their debts, thus guaranteeing a perfectly consistent zero return on investment.
