DeFi is the buzzword of 2020. Decentralized and without the need of an intermediary, it has created a variety of different financial applications that allows people to invest, borrow and earn cryptocurrencies in ways that are much better and easier than going the traditional banking method. The ability to bypass profit eating financial institutions mean that all parties have something to gain. Today, DeFi holds an astounding $14.5 billion in assets.
One of the most successful application of DeFi is giving people the ability to lock up their digital assets and receive stable coins in return, which they can use for their real life needs and return as per an agreement, all coded into a smart contract.
This benefits the borrowers and the lenders at the same time. Normally, people will turn towards to banks and other financial institutions in order to secure a loan. These central figures only act as middlemen, lending money that is not theirs, but secured from investors. The borrowers are asked to give in collateral and only a fraction of its value is offered as a loan. On top of that, the interest charged is high. For investors, they are relatively happy as they are earning a fixed interest on their investments, but the real catch lies in the interest given and charged by the banks. Borrowers are charged a high interest and only a small piece is forwarded to the investors, with the rest kept in the pocket as commission charges by the institutes.
DeFi has opened up a world of possibilities. Decentralized, DeFi lending allows for borrowers and lenders to interact directly, with borrowers gaining lower interest rates and at the same time the lenders earn a higher profit. There’s no middleman like banks or other financial institutions to eat into the profits. Furthermore, DeFi allows for much more flexible lending, with each contract custom made.
However, there is still a major barrier to DeFi lending. Borrowers still need to hand over collaterals, this time in the shape of acceptable cryptocurrencies. But what if you don’t have enough cryptos, the cryptos that are accepted by the lender, or worse- no crypto at all?
Non Collateral Lending through TrueFi
If DeFi has disrupted and lowered the barriers towards securing loans, TrueFi by TrustToken has utterly broken down the barriers. TrustToken’s TrueFi is a revolutionary decentralized protocol that allows for people to borrow tokens without the need of securing any collaterals.
The system is simple, lenders can deposit their TUSD stablecoins in the lending pool and receive voting rights to allow people to come in and borrow TRU, the TrustToken for their needs. Each borrower has to go through the voting process, where the lenders have to approve the lender and the amount that will be lent. This creates an ecosystem that is based on trust, of the lender and the borrower. With their own TUSD locked in and at stake, this removes any chances of approval of borrowers who would default or skip away with the coins.
TrueFi takes the whole loan system away from the hands of centralized authorities and hands it to the lenders. The lenders act individually, yet together as a team towards approving the loans, acting as a credit approver, loan calculator and predication market where they estimate the power of the borrower to return the money. In short, they become the credit firms themselves.
Co-founder of TrustToken, Rafael Cosman believes the platform and its protocol has found the perfect solution that empowers both parties, removes the middleman and creates a whole new economic power system,
“The aim is for TrueFi to become the ultimate market-driven, automated credit rating and lending system, freeing money to move wherever it creates the most value. It’s a significant pillar in our mission to increase access to financial opportunities, and our wide distribution of TRU will let anyone join in shaping the future of finance.”
TrueFi has gained the attention of people all over the world. Within its first day of launch, the non-collateral lending protocol gathered more than $35 million in total value locked. Last month, the pool depositors approved of staking 1.5 million in TRU for a loan request made by the Alameda Research, a form that is using decades of Wall Street and Silicon Valley experience to bring about liquidity in the current crypto market.
TrueFi is powered by TrustToken, the leading transparent stablecoin firm, famous for its True USD (TUSD) token and other stable coins. The platform offers TCAD, TAUD, THKD AND TGBP, with billions worth of money being transferred through these stablecoins every month. TUSD offers ultra-fast transaction services and is supported on major exchanges like Binance, OKEx and Huobi.
With its transparent nature and empowering people to lend out money, TrueFi is the next iteration of DeFi.