TrustToken, operator of decentralized finance (DeFi) lending protocol TrueFi and stablecoin TUSD, has raised $12.5 million in a brand new funding spherical.

BlockTower Capital, Andreessen Horowitz (a16z) and Alameda Analysis led the spherical by buying TRU, TrueFi’s native token, in keeping with an organization assertion. TrustToken stated it might use the proceeds to increase its staff and TrueFi’s operations 

“We’re trying to make use of this funding each to assist us scale the protocol, dimension of that current market, but additionally assist us to department into new markets,” TrustToken’s co-founder and CEO, Rafael Cosman, instructed CoinDesk. 

The spherical exhibits buyers’ rising curiosity in DeFi, however whereas many of the loans on this market are secured with cryptocurrency pledged by debtors, TrueFi lending doesn’t require collateral.  

In lieu of pledged belongings, TrueFi bases lending choices on credit score scores derived from on-chain and off-chain information. Since November 2020, the protocol has originated over $200 million in loans and paid out $1.7 million to lenders, with none defaults, in keeping with the corporate. 

With most DeFi protocols specializing in overcollateralized lending, “it’s by no means going to have the ability to develop to the size the place it will possibly truly take a big chunk out of conventional financing. So a key a part of that is truly having the ability to deliver extra off-chain information on-chain,” Cosman stated.

The spherical additionally comes as crypto lending, decentralized and in any other case, could be very a lot on regulators’ radar. In current weeks, centralized platform BlockFi, which presents interest-bearing accounts collateralized by cryptocurrencies, has drawn the ire of 5 state regulators.

Celsius, which raised about $20 million final yr, has lengthy claimed to demand collateral, although it could quietly have made just a few uncollateralized loans.

TrueFi’s on-chain credit score scores shall be helpful “for lenders to evaluate the place they wish to put their capital,” stated Blake Richardson, an investor at BlockTower.