Decentralized credit protocol TrueFi has introduced the Trinity protocol with an eye on increasing the capital efficiency of on-chain real-world assets (RWA). The new protocol will use the dollar-based TRI token backed by collateral assets to make it easier for users to acquire leverage and hedge risks.
The interest-bearing tfBILL, a tokenized short-term United States Treasury bill product, will be the first collateral asset used to back TRI. Other TrueFi pools, RWA from different protocols and other crypto-native assets could also be used.
A user could mint TRI on Trinity using tfBill or other assets as collateral and swap it for a stablecoin on an automated market maker. The user could then mint TRI through a smart contract it calls a vessel, borrow up to 92% of the loan-to-value ratio in TRI, swap that for the stablecoin again, mint more TRI and repeat the process. Eventually, the process would allow the user to earn up to 15–20% net yield.
Alternatively, a user could swap stablecoin for TRI and stake it in the sTRI vault, earning fees for a yield “expected to be near or above T-bill rates.” TRI could also be traded on secondary markets.
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The peak of on-chain RWA was in April 2022, according to TrueFi. It had hundreds of millions in loans to trading firms outstanding at that time. Now, the market for on-chain credit is only a third of the peak level.
Trinity is live on the Optimism Sepolia testnet. After an audit is finalized, initial users will be selected. It expects to have a $40 million TRI mint cap on the version that launches.
TrueFi is proposing to launch Trinity on Coinbase’s layer-2 Base network. It would not be available to U.S. users under the “most conservative initial rollout.” Base contains around 150,000 verified addresses that can confirm that a user is not U.S.-based and that institutions are whitelisted, it pointed out.
TrueFi introduced its first protocol in 2020 and originated $1 billion in loans in 2021.
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