(Disclaimer: I mention TUSD and TrueFi below; my brother is the CEO of the company behind those so you can guess my biases. None of this is financial advice)
have a giant pile of US dollars somewhere under someone’s control, and have that person act as a counterparty for anyone who wants to buy or sell 1 US dollar for 1 token. This is what Tether and USDC do.
Not quite—Tether hasn’t been properly backed by dollars since 2019 (see discussion over at Metaculus). A better example of a second fully-backed stablecoin would be TrueUSD (and its sister coins for other currencies, like TrueHKD).
Because it’s supposed to be trustless and decentralized, all loans are necessarily at least fully collateralized
TrueFi is offering uncollateralized loans. It’s not nearly as trustless and decentralized as something like Uniswap, but it is moving in that direction—loans are voted on by holders of the governance token TRU, and the project roadmap says that soon they’ll be doing more of this algorithmically based on info such as your on-chain credit history.
(also TrueFi is offering some pretty sweet yield farming rates right now :) )
Sure, uncollateralized lending is knowingly a higher-risk higher-reward space. So far they’ve had $57million in in successfully repaid loans and zero defaults, but obviously they can’t keep up that perfect streak forever, and it remains to be seen if the net yields still look great when some defaults inevitably occur.
(Disclaimer: I mention TUSD and TrueFi below; my brother is the CEO of the company behind those so you can guess my biases. None of this is financial advice)
Not quite—Tether hasn’t been properly backed by dollars since 2019 (see discussion over at Metaculus). A better example of a second fully-backed stablecoin would be TrueUSD (and its sister coins for other currencies, like TrueHKD).
TrueFi is offering uncollateralized loans. It’s not nearly as trustless and decentralized as something like Uniswap, but it is moving in that direction—loans are voted on by holders of the governance token TRU, and the project roadmap says that soon they’ll be doing more of this algorithmically based on info such as your on-chain credit history.
(also TrueFi is offering some pretty sweet yield farming rates right now :) )
Provided there’s no way for someone to effectively abuse the trust in the system.
Sure, uncollateralized lending is knowingly a higher-risk higher-reward space. So far they’ve had $57million in in successfully repaid loans and zero defaults, but obviously they can’t keep up that perfect streak forever, and it remains to be seen if the net yields still look great when some defaults inevitably occur.