TrueFi Capital Markets Arrive on Optimism L2
TrueFi is Optimism’s first credit protocol, broadening access, decreasing transaction costs, and improving speeds for lenders and borrowers. In this post, learn how to use TrueFi on L2.
TrueFi is now live on Optimism, bringing real-world, unsecured financial opportunities to L2 for the first time.
TrueFi was born on, and hit its first $1b in originations, on Ethereum. As the protocol built traction, we saw three things:
- L2 solutions were also growing robust DeFi communities, with faster speeds and lower fees than Ethereum
- These L2s were home to a growing demand for capital from borrowers
- TrueFi’s transaction costs on Ethereum were preventing lenders with holdings below a certain size from participating in lending
After considering many Layer 1 and Layer 2 solutions, we’re proud to share TrueFi’s official launch on Optimism (see our coverage and official announcement), bringing the unsecured lending ecosystem to new users.
The launch on Optimism offers the TrueFi community a faster, cheaper user experience, making for even more capital-effective lending and borrowing, and opens access to a broader lender base — all directly on top of the Ethereum ecosystem.
A Brief History of TrueFi
TrueFi originated DeFi’s first ever collateral-free loan in November 2020 — and over the next 18 months, the protocol has grown and evolved tremendously. Now at over $1.65 billion in originations and still enjoying a perfect repayment rate, TrueFi’s greatest transformation was the launch of on-chain capital markets (formerly called the lending marketplace).
From serving crypto-native borrowers through permissionless pools at our start, to now supporting a growing number of partnered and independent portfolio managers allocating DeFi capital to real world opportunities, TrueFi is quickly becoming the public infrastructure of global lending.
The benefits of TrueFi versus other lending and borrowing avenues are becoming clear.
- For lenders, TrueFi is a home to a growing list of crypto-native and real-world lending opportunities with some of the most competitive risk-adjusted returns in DeFi.
- For borrowers, TrueFi offers rapid access to market-priced capital at competitive terms.
- For portfolio managers, TrueFi offers the best of both traditional and DeFi markets: deep portfolio controls and hands-on help making the on-chain transition, with the speed, cost reductions, global liquidity, and transparency of blockchain.
Over time, TrueFi aims to bring even more of the +$8 trillion traditional credit market on-chain, starting with the most inefficient, complex, and esoteric opportunities (more on our ICE strategy), and expanding out to support ever more of the traditional unsecured lending business.
ETH Gas Fees and Network Congestion
TrueFi was built by a team with deep conviction in the Ethereum ecosystem. With the hundreds of billions of dollars in liquidity, deep adoption among borrowers, and a strong ecosystem of technical and non-technical contributors, Ethereum has been pivotal to TrueFi’s success to date.
As Ethereum continues to grow and evolve, scalability questions are pushed to the forefront. In the heat of DeFi or NFT summers, lenders interacting with TrueFi sometimes faced transaction fees amounting to more than the expected annual yield of the loan they planned to make, which would sometimes also be subject to failed transactions or slowdowns due to substantial network congestion.
While TrueFi remains bullish on the long-term future of Ethereum, scaling to an L2 became necessary to open the gates to more users — especially those outside the US, or wishing to invest small amounts of capital. TrueFi has chosen to work with Optimism as our first L2.
The Optimism L2: What Is It & Why Use It?
Optimism is a Layer 2 scaling solution for Ethereum, supporting all dApps in the existing Ethereum ecosystem. This leading L2 uses a technique known as optimistic rollups, whereby multiple transactions are “rolled up” into one and settled on another blockchain, with records fed back to the main Ethereum chain. This dramatically reduces the costs of most interactions with dApps like TrueFi, opening the door to a broader, more global user base.
Optimistic Rollups
Optimistic rollups increase Ethereum’s transactions per second and drastically decrease fees. On average, Optimism fees are 96x less than on Ethereum. As of March 2022, Optimism secured about $740 million of on-chain value.
Optimism’s innovation in terms of scalability, speed, and capital efficiency will provide the perfect environment needed for TrueFi to flourish, and we’re proud to introduce the unique opportunities of on-chain credit to lender and borrowers transacting on Optimism.
Benefits to TrueFi Lenders
By launching on Optimism, all present and future TrueFi lenders are able to enjoy TrueFi’s lucrative crypto-native and real-world lending yields, with lower transaction fees than ever. With a focus on user accessibility, optimistic rollups promise TrueFi lenders quicker, cheaper, and equally secure transactions through Layer 2 technology. With lower fees and higher speeds, we expect TrueFi to reach a whole new class of lender and grow the overall TrueFi Value Outstanding (our measure of capital allocated via TrueFi).
Benefits to TrueFi Borrowers
The Optimism version of the protocol will feature its own lending portfolios distinct from those on mainnet TrueFi, giving prospective TrueFi borrowers access to a whole new pool of uncollateralized capital, and lower than ever fees.
The existing single-borrower portfolios on TrueFi will have the option of migrating to Optimism upon their maturity date, as well as opening new dedicated lending portfolios on the Layer 2 chain. The first portfolio to launch on Optimism is expected to arrive in July 2022.
Broad Benefits to TrueFi
The launch aims to amplify the overall user activity on TrueFi, in both volume of lending and number of individual participants. It brings the protocol into Optimism’s bustling economy, which supports hundreds of millions of total value locked and more than 80,000 transactions per day.
The move allows TrueFi users to port TRU straight to Optimism without having to deposit on ETH mainnet and uses a bridge to migrate onto Layer 2, meaning they’ll be able to move their assets and access the wider Ethereum network at a lower cost.
How to use TrueFi on Optimism
The Optimism network is intuitive to use, especially with MetaMask. While the tutorial below offers a step-by-step guide to manually transacting with TrueFi on Optimism, the easiest way to achieve Optimism support in your MetaMask wallet is by using ChainId at this link.
Connecting your MetaMask to the Optimism L2 Network
There are two ways you can switch to the Optimism network using MetaMask. Manually inputting the information and going through chainid.link. We’ll walk through both options.
Option One: Chainid.link
The easiest way to connect to Optimism is by clicking HERE and auto-populating the network details in Metamask.
Option Two: Manual Setup
Open your MetaMask wallet and click “Add Network”
Enter these Optimistic Ethereum Mainnet settings:
Network name: Optimistic Ethereum
RPC URL: https://mainnet.optimism.io
Chain ID: 10
Currency: ETH
Explorer: https://optimistic.etherscan.io
Click “Save”
Congratulations, you’re connected to the Optimism network!
Funding your Optimism wallet by bridging ETH
To find a bridge, select from this list of options or use the official Optimism bridge from Ethereum.
- Depositing Funds
Once connected to Optimism, deposit funds onto the platform. This process is relatively simple and will be familiar to anyone who has bridged funds to other chains. Select the token amount you’d like to bridge over and click “Deposit.”
2. Confirm the deposit
You will again need to confirm the deposit. Click “Deposit” and confirm the transaction in your wallet.
3. Initiate the deposit
Confirm the transaction through your wallet. Upon confirmation, it should take anywhere from two to five minutes for funds to be available for use on Optimism.
Congratulations, you’ve reached Layer 2. Now that you’ve bridged your tokens, we can see how to use TrueFi on Optimism.
Using TrueFi on Optimism
Log into TrueFi and connect to your MetaMask wallet. Once connected, switch to the Optimism network from the dropdown menu in the top right corner.
Check out a simple GIF walkthrough of this process below:
Once connected, you will see which portfolios are available on the Optimism network by looking at the badge layered on top of the portfolio icon. It’s important to note Optimism will host its own lending portfolios distinct from those on mainnet TrueFi.
Get Started
By combining the unique lending protocol design of TrueFi with the scaling power and ecosystem of Optimism, TrueFi is one step closer to creating the definitive on-chain capital market and bringing the benefits of DeFi to the real world.
You’re now ready to try TrueFi on Optimism. Get started by visiting https://app.truefi.io
You can learn more about TrueFi on our blog, and read the Optimism blog here.
Finally, meet your fellow TrueFi users on Discord and follow along for further updates on Twitter.
