TrueFi announced $12.5 million fundraiser

TrueFi announced last Wednesday, August 4, through its Twitter account, a fundraising of $12.5 million by BlockTower Capital, A16z and Alameda Research. According to the company, these funds will go towards scaling #TrueFi, the world’s leading unsecured loan protocol, powered by $TRU.

Image about the TrueFi post on Twitter

“TrustToken, operator of the decentralized finance (DeFi) lending protocol TrueFi and stablecoin TUSD, has raised $12.5 million in a new round of funding”, he said via an article posted on Coindesk.

According to the company, BlockTower Capital, Andreessen Horowitz (a16z) and Sam Bankman-Fried’s Alameda Research led the round by buying TRU, TrueFi’s native token, according to a company statement. TrustToken said it would use the proceeds to expand its team and TrueFi operations.

“We are looking to use this funding to help us scale the protocol, the size of that existing market, but also to help us branch out into new markets”, TrustToken co-founder and CEO Rafael Cosman told CoinDesk.

Rather than pledged assets, TrueFi explained that it bases lending decisions on credit scores derived from on- and off-chain data. Since November 2020, the protocol has originated more than $200 million in loans and paid $1.7 million to lenders, without any default, according to the company.

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Likewise, since most DeFi protocols focus on oversecured loans, “it will never be able to grow to a scale where it can actually significantly reduce traditional financing. So, a key part of this is being able to bring more off-chain data into the chain”, Cosman said.

“The round also comes in the form of crypto loans, decentralized or otherwise, and is very much on the radar of regulators. In recent weeks, the centralized platform BlockFi, which offers interest-bearing accounts guaranteed by cryptocurrencies, has drawn the ire of five state regulators”, he added.

For his part, Blake Richardson, an investor at BlockTower, commented that TrueFi’s on-chain credit scores will be beneficial “for lenders to assess where they want to put their capital”.

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