Building a New Global Financial System: An Exclusive Interview With Tyler Wallace, Analytics Head at TrustToken

In the world of DeFi, TrustToken is a platform that constantly makes the news for its innovative products and unique approach to financial systems. It started off as a product facilitating the tokenization of fiat through various stablecoins. After a successful run, TrustToken spread its wings into the world of DeFi, creating a fully transparent lending network called TrueFi. 

In this interview, we have Tyler Wallace, the head analyst at TrustToken, sharing his insights into the platform, the current state of DeFi, and the possible future. He also answered the most pressing question of whether or not DeFi should be regulated. 

How was the Transition from TradFi to DeFi and Crypto? Will this be the norm?

“TradFi to DeFi is the next natural step in the evolutionary process of finance,” said Tyler. The opportunities that DeFi brings are virtually unheard of in traditional finance. Liquidity mining in DeFi is one of the main driving forces for the growth of DeFi, as it gives users the opportunity to earn higher yields and ownership of protocols. DeFi also creates arbitrage opportunities that are rarely seen in traditional finance. For investors with high risk tolerance, DeFi presents a golden opportunity to earn yields and own the upside in an emerging asset class. 

“This is probably why we see both retail and institutional investors flocking to the space. As a company that got its start by tokenizing real-world assets, TrustToken has always aimed to be at the brink of this transition. Products like TrueFX and TrueFi help investors get access to the crypto economy.” 

Why TrueFi for DeFi Borrowers?

Tyler explains that TrueFi is the largest and one of the very few protocols in DeFi offering fixed-term zero-collateral loans. Most of us are aware of DeFi’s long standing problem with over-collateralized loans. Popular protocols like Aave, Compound, and Maker require users to lock up more assets than the capital they’re borrowing. This is done to compensate for the volatility of assets and prevent liquidation. But having to provide huge collateral to obtain loans sets high entry barriers and makes DeFi lending and borrowing inaccessible. 

“This is why with TrueFi, we’ve introduced unsecured lending to DeFi. Our approach to the lending and borrowing process is quite different from what over-collateralized protocols like Compound and Aave are doing today.

“Borrowers go through an on-boarding process driven by our community and are assigned a credit score between 0 to 255 that determines their access to capital. For the DeFi community, this new approach means two things. It opens up access to almost anyone across the globe, irrespective of their background, to participate in the lending and borrowing process. As all risk parameters are pre-assessed by the community, it also eliminates the need for collateral.”

Tyler further stated that, so far, TrueFi has been able to provide over $1 billion worth of zero-collateral loans, while maintaining a 0% default rate. It is safe to say that this approach is already being welcomed by the DeFi community with open arms. 

Can You Give us An Insight Into How Blockchain is Making the Financial System More Transparent With On-Chain Analysis?

“The importance of data in the modern world can never be overstated. The internet proliferated access to data across the world, 24/7. Blockchain technology furthers this proliferation, as blockchain is a huge open database. It is home to tons of valuable data that can help us make better decisions and build better products in the years to come. 

“On-chain analysis is the process of getting insights from this blockchain data for the use of businesses, institutions, and regulators. The most interesting part about on-chain analysis is that all of this data is available in real time to everyone. In the traditional setup, analysts and investors had to wait for the quarterly reports to gauge what’s happening in the market. But now there are tools like Etherscan, Dune Analytics, and Defilama that give real-time updates to analysts and investors, creating an extremely transparent industry.  

“On-chain analysis, I believe, will play a huge role in catapulting the success of DeFi itself.”

What is Your Take on the Future of Crypto and DeFi?

“DeFi and crypto present a whole host of possibilities for the future of finance. They have the potential to unleash socio-economic growth throughout the world. What I’m most excited about is how this new technology removes barriers to entry and expands horizons in terms of access to capital. Lending protocols on DeFi have enabled people from the remotest of locations to apply for and get loans approved, artists from across the globe to create and sell NFTs, and young builders to launch innovative products that attract millions of dollars on day 1. 

“The possibilities with crypto are virtually endless and have only just begun. It will be interesting to see how the future unfolds.”