TrueFi, a decentralized credit protocol, has unveiled the Trinity protocol with the aim of enhancing the efficiency of on-chain real-world assets (RWA). The new protocol will introduce the TRI token, which is backed by collateral assets in dollars, making it simpler for users to acquire leverage and hedge risks.
The first collateral asset to support TRI will be the interest-bearing tfBILL, a tokenized short-term United States Treasury bill product. However, other TrueFi pools, RWA from different protocols, and other crypto-native assets may also be used as collateral.
Using tfBILL or other assets as collateral, users will be able to mint TRI on Trinity and exchange it for a stablecoin on an automated market maker. Through a smart contract referred to as a vessel, users can borrow up to 92% of the loan-to-value ratio in TRI, swap it back for the stablecoin, mint more TRI, and repeat the process. Ultimately, this process could enable users to earn a net yield of 15-20%.
Alternatively, users can swap stablecoin for TRI and stake it in the sTRI vault, earning fees for a yield that is expected to be on par with or higher than T-bill rates. TRI can also be traded on secondary markets.
TrueFi noted that the peak of on-chain RWA occurred in April 2022, with hundreds of millions of outstanding loans to trading firms. However, the current market for on-chain credit is only a third of the peak level.
The Trinity protocol is currently live on the Optimism Sepolia testnet, and after the completion of an audit, initial users will be selected. The initial version of Trinity is expected to have a $40 million mint cap for TRI.
TrueFi is planning to launch Trinity on Coinbase’s layer-2 Base network, although it will not be available to U.S. users initially. The platform aims to have a conservative rollout that excludes U.S. users, as the Base network contains approximately 150,000 verified addresses that can confirm non-U.S. residency and whitelist institutions.
TrueFi first introduced its protocol in 2020 and originated $1 billion in loans in 2021.