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Prepared in a post-Terra world



Not to downplay: the last six months have been a bloodbath in the cryptocurrency world.

The macroeconomic climate has stopped cooperating, markets are crashing, and investors are taking risk to the extreme. However, while cryptocurrencies have tanked, there is an important distinction to be made.

Excessively leveraged players, such as Three Arrows Capital and Celsius, whose bankruptcy was part of a spiral of contagion that swept through the sector, are largely CeFi, or centralized financial firms.

Celsius presented itself as a bank, but in reality it was more of a hedge fund. In the end, their investments were misguided and insolvency stalked them. Unfortunately, many of their clients did not know how their money was used and where their returns came from. Or, more simply, there was a lack of transparency.


DeFi, on the other hand, went exactly as planned. Thanks to the technology we call blockchain, everything went according to plan. Margin calls and settlements were happening on a blockchain, and everyone could see what was happening in real time.

Celsius, for its part, sent out an email on a Sunday night saying that they had suddenly suspended the withdrawals, and the rest is history (or, to be more accurate, part of a very long legal process that will play out over the next few years). Ask Mt. Gox investors for more information here).

I sat down with the co-founder and CEO of TrustToken, which is behind the DeFi TrueFi lending protocol TrueFi, to talk about this and more. TrueFi brings unsecured lending to the blockchain, striving to maximize capital efficiency for borrowers and rates of return for lenders.

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Yes, you’ve probably noticed the phrase “unsecured.” Overcollateralization may be commonplace in cryptocurrencies these days, but the reality is that the model is inefficient in its use of capital.

Clearly there is a trade-off with respect to credit risk, but should all borrowers be treated the same, as the DeFi model currently does? It’s a nuanced debate that Rafael and I delve into in the podcast – and it’s worth noting that in its first year alone, TrueFi achieved $1 billion in loans without a single default. Today, it has yet to default.

We also talk about the bear market (hard not to, isn’t it?), we talk about stablecoins – TrustToken also has a set of stablecoins, including the 5th largest in the current market by market capitalization, TrueUSD, as well as Tether’s reserve position and much more.

Spotify link: here

YouTube : here

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