TrustToken, creators of TUSD, has raised a $12.5 million round of funding to scale TrueFi, its DeFi protocol for collateral-free loans which is powered by on-chain credit scores. The strategic funding round is led by Blocktower with participation from Andreessen Horowitz (a16z) and Alameda Research through the purchase of TRU, TrueFi’s native token, under lockup. The funding will be allotted to hiring in engineering and business, operations expansion and treasury diversification.
Since facilitating DeFi’s first uncollateralized loan in November 2020, the TrueFi protocol has originated over $200 million in such loans and paid out $1.7 million to lenders, with no defaults to date, the company said.
“The future of finance demands maximum capital efficiency – and TrueFi is leading the charge with on-chain credit and collateral-free lending,” TrustToken CEO Rafael Cosman said. “This fundraise will allow TrueFi to scale through robust hiring and strategic investments of our own, allowing DeFi to offer more diversified yields for lenders and even better capital access for credit-worthy borrowers. In our vision of DeFi, capital instantly moves to the best risk-adjusted opportunities. We’re proud to be building some of the most important components to making this future a reality.”
“BlockTower believes reputation-based lending is a key step for DeFi, and TrueFi is a clear leader in this area,” BlockTower Capital founder Ari Paul said. “Their team has made important advances including developing on-chain credit scores, which we believe will enable a new kind of capital-efficient lending, both for TrueFi lending pools and across all of DeFi.”
Andreessen Horowitz re-upped, doubling down on its original investment.
“Since we got to know the TrustToken team and made our first investment back in 2017, we’ve been impressed by their ambition and ability to execute,” said Ali Yahya, a16z general partner.“They were a first-mover in the world of fiat-backed stablecoins and have more recently made a lot of progress toward building the first unsecured lending protocol in DeFi. We’re excited to continue to invest in the team!”
Finally, the strategic round also includes participation from TrueFi borrowers, such as Alameda Research. CEO Sam Bankman-Fried comments on the firm’s participation, “Starting as TrueFi’s first borrower, Alameda is proud to now become investors in the team and technology behind it,” Alameda CEO Sam Bankman-Fried said. “We see TrueFi unsecured loans growing far beyond crypto, and we plan to be partners and users at every stage of the protocol’s growth.”