TrueFi, a decentralized credit protocol, has unveiled the Trinity protocol in order to enhance the efficiency of on-chain real-world assets (RWA). The primary objective of the new protocol is to enable users to acquire leverage and mitigate risks by utilizing the dollar-based TRI token, which is backed by collateral assets.
The initial 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 various protocols, and other crypto-native assets may also be used as collateral.
With Trinity, users have the option to mint TRI by using tfBILL or other assets as collateral, and subsequently exchange it for a stablecoin on an automated market maker. Through a smart contract known as a vessel, users can borrow up to 92% of the loan-to-value ratio in TRI, swap it for the stablecoin again, mint more TRI, and repeat the process. This process can potentially allow users to earn a net yield of up to 15-20%.
Additionally, users can swap stablecoin for TRI and stake it in the sTRI vault, earning fees that are expected to be comparable to or higher than T-bill rates. TRI can also be traded on secondary markets.
According to TrueFi, the peak of on-chain RWA occurred in April 2022, with outstanding loans to trading firms amounting to hundreds of millions of dollars. However, the current on-chain credit market is only a third of its peak level.
Trinity is currently available on the Optimism Sepolia testnet, and once the audit is completed, initial users will be selected. The upcoming version of Trinity is expected to have a mint cap of $40 million for TRI.
TrueFi plans to launch Trinity on Coinbase’s layer-2 Base network, although it will not be accessible to U.S. users initially due to a cautious rollout strategy. Base consists of approximately 150,000 verified addresses that can confirm non-U.S. user status and whitelist institutions.
TrueFi initially introduced its first protocol in 2020 and facilitated $1 billion in loans in 2021.