FIP 56 - TrueFi AMO

For more information about this proposal, please see the full discussion here: https://gov.frax.finance/t/fip-56-truefi-amo/1236

Author

Ryan Rodenbaugh

Summary

Create a TrueFi AMO to provide liquidity directly to the TrueFi Protocol

About TrueFi

TrueFi was DeFi’s first uncollateralized lending protocol. TrueFi aims to be the leading protocol allowing Asset Managers (we call them “portfolio managers”) to run lending strategies on-chain. Apart from already-proven lending strategies to crypto-native institutions, TrueFi is actively working with 3rd party Portfolio Managers who are interested in running their strategies on our protocol.

We are aiming to bridge the gap between RWA and DeFi and provide a platform where RWA originators can access crypto capital.

Since TrueFi’s launch in November 2020

• The protocol has originated ~$1.4bn in uncollateralized loans across 121 loans and ~35 borrowers with 0 defaults.

• The protocol currently supports USDC, USDT, TUSD, and BUSD and offers loans ranging from 30 to 180 days.

• Average borrower rates (without token incentives) are roughly 9.5% with a range from 7.16% - 18%.

• Total interest generated between November 2020 and today is 19.32mm USD

Background and Motivation

• Stablecoins (such as FRAX) are money-printing machines that have the potential to completely alter how we think about capital deployment and the cost of capital within the crypto markets. TrueFi has proven itself to be a reliable source of yield for crypto lenders and would like to partner with FRAX as a source of reliable revenue for the protocol.

• For this first AMO, the idea is to generate yield for FRAX while also tapping into a new source of liquidity for TrueFi (win/win situation). Longer-term there are a number of additional partnership opportunities that we could pursue:

  • Given our large base of trading and market-making firms along with TrueFi’s plans for L2 expansion, we can help to create market-maker-focused lending pools to increase FRAX liquidity on L2s.
  • In addition, we will be onboarding several RWA-type lending opportunities over the coming months and if FRAX would like exposure to those types of opportunities, we are happy to present those, as well.

For the initial proposal, we will seek USDC and FRAX liquidity. For USDC, we have several products that FRAX could deposit the USDC into, including our permissionless pools. We also have products such as an “Alameda single-borrower pool” where Alameda is the only borrower in the pool. For FRAX liquidity, we would aim to create a new FRAX pool where we will have many of the same market makers on the platform borrowing FRAX. Once approved, we will work with the FRAX team to decide on the optimal pool/portfolio to deposit the funds into based on FRAX's preference for yield/risk/duration.

Excited for the opportunity to partner!

Proposal

Create a TrueFi AMO and authorize up to $100m worth of liquidity for use in the AMO ($50mm in USDC, $50mm in FRAX).

For: Create the TrueFi AMO

Against: Do nothing