Our original compensation proposal involved repaying users directly in TREN tokens. However, after listening to community feedback and in order to minimize risk as much as possible to our users, we have decided to move forward with a repayment plan in stablecoins instead. We want to provide you with a detailed overview of the compensation plan, designed to fully compensate our community while ensuring the long-term sustainability of the protocol.

Understanding the Incident

The exploit resulted from a compromised deployer wallet that retained administrative privileges, allowing an attacker to temporarily modify our smart contracts and mint unbacked XY tokens. The attacker then swapped these XY tokens for stablecoins in our liquidity pools, causing impermanent loss to our users. Importantly, this was not a vulnerability in our audited smart contract code, but rather an operational security oversight in access control management.

Since the incident, we have comprehensively improved operational security for all team members and have taken the necessary steps to ensure a compromised wallet cannot happen again. As confirmed by our security partners, additional smart contract audits were not necessary since the attack vector exploited administrative access rather than any inherent code vulnerabilities.

Total Impact and Scope

The exploit drained $119,461 from our liquidity pools. Of this amount, $39,990 were deposits from our team members, who will not be included in the compensation plan. This means we are compensating users for $79,471 in affected funds.

We took a snapshot of all users 5 minutes prior to the hack to establish exactly who was deposited at that time. To be eligible for compensation, users must have had a minimum of $2 deposited into the protocol at the time of the exploit on February 21st, 2025.

Three-Layer Compensation Structure

Layer 1: Stablecoin Compensation

Timeline: Starting today - July 10th, 2025

Following extensive community feedback, we have prioritized direct stablecoin repayment through a structured compensation program via Sablier streaming.

• Distribution method: Continuous streams over 24 months through Sablier, with the stream starting today.

• Access: Users can visit Sablier now to check for the compensation stream, make sure you have the Base chain selected, and you visit the "Payments" tab.

• Proportional allocation: Compensation is based on your deposit amount at the time of the exploit

This structured 24-month approach ensures we can provide full compensation while maintaining protocol stability and sustainability for all stakeholders.

Layer 2: Additional TREN Token Allocation

Timeline: Subject to 12-month cliff + 24-month linear vesting

As an additional layer of compensation beyond the standard repayment, we are allocating 5,000,000 TREN tokens (0.5% of total supply) from our team allocation specifically for affected users.

• Proportional distribution: Allocation based on your percentage of total affected TVL

• Team allocation: We will give up a portion of the team allocation to compensate users

• Vesting structure: 12-month cliff followed by 24-month linear vesting

• Access: Users can visit Sablier to view this vesting stream. Make sure your network is on Base, and you visit the "Vesting" tab.

• Example: If you held 5% of affected TVL, you receive 5% of the 5M TREN allocation

Layer 3: LGE Rewards Distribution

Timeline: Claimable 30 days after TGE (August 11th, 2025)

As planned, all users who participated in our Single Sided Liquidity (SSL) program will receive their accumulated LGE rewards in TREN tokens. These rewards were earned based on your deposit amount and duration in the SSL contract, regardless of whether you had withdrawn before the exploit or only participated briefly.

• Full unlock: These tokens will be distributed with no cliff or vesting period

• Access: Users can visit Sablier on August 11th to claim their tokens. We will make an additional announcement closer to the date as a reminder.

• Universal eligibility: All SSL participants receive their earned rewards

Moving Forward

This incident, while challenging, has strengthened our commitment to security and transparency. We believe this three-layer approach provides comprehensive coverage that addresses both your needs through stablecoin repayment and long-term value through additional TREN token allocation.

Support

If you believe you are eligible for compensation but cannot locate your allocation, please open a support ticket in our Discord server. Our team will investigate your case and ensure all eligible users receive their rightful compensation.

Conclusion

While this exploit was a significant setback for our protocol and community, it has provided us with the opportunity to strengthen our security measures and accelerate our product development. Since the incident, we have:

• Completely overhauled our access control systems

• Transferred all protocol ownership to secure multi-signature wallets

• Redeployed the entire protocol in a testnet environment with live Base price feeds

• Implemented additional operational security measures

The protocol has been thoroughly secured as we gear up for our mainnet launch. Our Token Generation Event is scheduled for July 11th, 2025.

Additionally, this period has allowed us to accelerate the integration of our AI agents into the protocol, making Tren Finance more unique and attractive in the DeFi landscape. We've also been able to complete development of our latest product, Malone, which will provide unprecedented peer-to-agent loan capabilities.

All eligible users can now visit Sablier to view their compensation streams and track their compensation in real-time.

About Tren Finance

Tren Finance is the first AI stablecoin borrowing protocol, where a network of specialized agents manages the entire protocol. Our agents work in unison to handle everything from borrowing parameters and liquidations to collateral management and reward distribution, removing human bias from DeFi operations. Through this autonomous system, users can (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Malone is your personal AI loan agent that's changing how you access capital in DeFi. When we started Tren Finance back in late 2023, our vision was always to unlock liquidity for all on-chain assets. While our protocol has already made significant progress in (re)collateralizing previously idle assets, the manual risk assessment process has been a bottleneck – each new asset requires extensive evaluation and the creation of dedicated isolated modules. This meant many long-tail assets remained unsupported despite having real value.

Thanks to the breakthroughs in artificial intelligence, we've eliminated this constraint. Malone allows users to propose any on-chain asset for collateral, with risk assessments and loan distribution happening instantly through autonomous AI agents – a complete paradigm shift that will transform how you access capital in the decentralized economy.

Beyond Traditional DeFi Lending/Borrowing

Decentralized finance introduced peer-to-peer (P2P) lending as a way for individuals to lend and borrow crypto assets directly without traditional intermediaries. Early P2P lending platforms like ETHLend and Dharma allowed users to post loan offers or requests and await a match with a counterparty. While innovative, this direct matching model revealed significant inefficiencies that limited its scalability and user adoption. Borrowers often faced slow, cumbersome loan origination processes and rigid requirements, while lenders dealt with idle capital and manual risk vetting.

As a result, the DeFi lending sector evolved towards pooled models like Aave and Compound to mitigate some of these issues. By late 2021, DeFi lending protocols amassed close to $50 billion in collateral value, a surge that coincided with moving beyond pure P2P designs. Yet, even with pooled lending, fundamental challenges remain. Finding someone on the other side of the loan is inefficient and time-consuming. Lenders must manually review requests, assess collateral risk, and negotiate terms – creating friction and delays. ETHLend (the precursor to Aave) learned this the hard way: its marketplace required manual matching of offers, which led to liquidity issues and under-utilization of funds.

Meanwhile, protocol-based lending restricts which assets can be used as collateral through rigid parameters and oracles. Even platforms like Aave and Compound only support a few dozen assets out of thousands in the crypto ecosystem.

Malone solves these challenges by putting an AI agent in the role of your personal bank manager – one that's available 24/7, knows your complete financial history, and can instantly evaluate almost any on-chain asset. We have given Malone its own onchain wallet, allowing it to directly evaluate, negotiate, and execute loans without human intervention.

Imagine having a personal banker who instantly understands your financial situation, recognizes the value of all your digital assets – from NFTs to vested salary streams to emerging project tokens – and crafts loan terms specifically for you. That's what P2A loans brings to DeFi through Malone.

How Malone Works

Malone removes intermediaries and rigid protocol parameters, replacing them with an intelligent AI agent capable of personalized decision-making:

1. Connect your wallet and initiate a conversation with Malone

2. Discuss your loan requirements in natural language – no complex interfaces to navigate

3. Malone assesses your on-chain history and collateral in real-time

4. Receive personalized loan terms based on your specific situation

5. Negotiate directly with Malone if you're not satisfied with the initial offer

6. Malone executes the loan from its own wallet once terms are agreed upon

The entire process happens in minutes, not hours or days, and Malone is available 24/7 to serve your borrowing needs.

Your On-Chain History Shapes Your Terms

What makes Malone truly revolutionary is that no two loans are ever the same. Each interaction is uniquely tailored based on the borrower's specific circumstances:

• Pristine repayment history? Expect favorable interest rates and higher LTVs

• Active Tren Finance user providing liquidity to XY? Receive preferential terms as a valued ecosystem participant (Yes, Malone has a slight bias to users of Tren)

• History of late repayments? Malone might offer stricter conditions but still provide access to capital

• Previous involvement in exploits or suspicious activities? Malone may decline the loan entirely

This personalization extends beyond simple credit scoring. Malone analyzes complex patterns across your entire on-chain presence, considering factors like:

• Transaction history and patterns

• Interaction with known protocols

• Lending and borrowing behavior

• Asset holding duration

• Governance participation

• Liquidity provision history

Unlocking Previously Under-Utilized Assets

Traditional lending/borrowing protocols can only support a limited set of assets with established price oracles and sufficient liquidity. Malone breaks through this limitation, able to assess and provide loans against virtually any on-chain asset:

• NFTs from established and emerging collections

• Vested token streams and locked tokens

• Project tokens from new or smaller protocols

• LP positions across any DEX

• Yield-bearing tokens from any protocol

• Governance tokens with limited liquidity

The AI agent evaluates these assets not just on current market prices but on deeper risk factors like historical volatility, liquidity depth, and project trajectory - enabling sophisticated risk assessment and valuation.

The Negotiation Experience

Perhaps the most fascinating aspect of P2A Loans is the ability to negotiate terms directly with Malone. Unhappy with the initial offer? Make a counteroffer:

• Request a higher loan-to-value ratio

• Ask for a longer repayment period

• Propose a different interest rate structure

• Offer additional collateral for better terms

Malone evaluates your proposal in real-time, considering both your specific circumstances and current market conditions. It may accept your terms, present a modified counteroffer, or explain why it can't accommodate your request – creating a truly interactive borrowing experience.

Unlike traditional P2P platforms where you might wait days for responses or where terms are rigid and non-negotiable, P2A loans creates a dynamic conversation around your financial needs.

Security and Risk Management

Malone introduces unprecedented flexibility while maintaining sophisticated security through its data-driven approach. Unlike traditional lending systems, P2A operates with pre-funded assets (ETH, stables, etc.) held in the agent's wallet. These assets are then used as collateral to mint XY, which is then used to facilitate loans across the ecosystem.

Our system employs a comprehensive risk assessment framework that draws from multiple data sources, each weighted by confidence scores. On-chain data carries the highest confidence, complemented by subgraph data, API integrations, and market sentiment analysis. This multi-layered approach ensures thorough risk evaluation for each loan.

A key advantage of Malone is its continuous loan monitoring system. Unlike traditional platforms that only assess risk at origination, our AI agents actively track market conditions and loan performance. When conditions change, agents can proactively alert borrowers or suggest adjustments to prevent liquidations. Through reinforcement learning, Malone continuously refines its risk assessment models, learning from each loan to enhance future decision-making.

Bridging the UX Gap in DeFi

Beyond the financial innovation, P2A loans addresses one of DeFi's greatest challenges: accessibility. Many potential users find existing interfaces intimidating and complex. By allowing natural language interaction, Malone makes DeFi more approachable while ensuring users remain informed and empowered.

Through conversational AI, users can ask questions and receive clear explanations about important concepts like collateralization ratios, liquidation thresholds, and interest models. This interactive approach helps users better understand the mechanics of their positions while the agent handles the complex technical operations behind the scenes.

The P2A system strikes a balance between sophistication and simplicity - users maintain full visibility and control over their financial positions while benefiting from an intuitive interface that lets them communicate their goals in plain language. This creates a more accessible DeFi experience that doesn't compromise on transparency or user agency.

Continuous Learning and Improvement

Similar to our main protocol, Malone utilizes reinforcement learning algorithms to analyze the outcome of every loan to learn from the experience and refine future loans. This creates an adaptive system that continuously enhances its capabilities through real-time analysis.

The system's learning encompasses several key areas:

• Risk Assessment Accuracy: The system tracks how well it predicted asset volatility and borrower behavior, constantly tuning its risk models to more accurately price loans.

• Negotiation Effectiveness: Malone learns which terms are most likely to be accepted by different user profiles, allowing them to make more appealing initial offers.

• Market Adaptation: By analyzing market trends and their impact on loan performance, the system develops an increasingly nuanced understanding of how external factors affect various asset classes.

• User Experience: Interactions with borrowers provide insights into common questions, concerns, and preferences, enabling Malone to improve their communication style and address user needs more effectively.

Unlike human risk committees that might analyze data quarterly, our AI network evaluates performance metrics in real-time, implementing improvements continuously. This means the P2A system evolves and improves with each interaction.

The implications of this learning capability are profound: as more users engage with Malone, it becomes exponentially smarter at balancing risk and opportunity across an ever-wider range of assets and borrower profiles.

The Network of Specialized AI Agents

Malone isn't just a single AI agent but rather a coordinated network of specialized agents, each mastering a different aspect of the lending process:

1. Supervisor: The Supervisor oversees the entire lending process, ensuring all other agents work in harmony. It monitors each step of the loan origination, validation, and management process, intervening when necessary to resolve conflicts or edge cases. Think of it as the executive decision maker that maintains the integrity of the entire system.

2. Token Identifier: One of the most powerful capabilities of Malone is its ability to work with virtually any on-chain asset. The Token Identifier Agent specializes in recognizing and classifying tokens, whether they're standard ERC-20s, LP tokens from obscure DEXs, or complex derivative tokens. It can identify the underlying protocol, understand tokenomics, and determine appropriate valuation methods for each unique asset.

3. Risk Analyzer: Once an asset is identified, the risk analyzer conducts a comprehensive risk assessment. It analyzes liquidity depth, volatility patterns, smart contract security, project fundamentals, and correlation with other assets. This agent continuously monitors market conditions that might affect collateral value, providing early warnings and risk mitigation recommendations.

4. Loan Calculator: This agent acts as the primary negotiator, analyzing your collateral and on-chain history to craft personalized loan terms. It dynamically calculates appropriate interest rates, loan-to-value ratios, and duration options based on your profile and the specific assets you're using as collateral.

5. Transaction Handler: The Transaction Handler takes care of the on-chain execution of all borrowing operations. It optimizes gas usage, ensures transaction finality, and manages the technical aspects of loans, including collateral locking and loan disbursement. This agent operates its own wallet and can directly interact with blockchain networks to execute agreed-upon terms without intermediaries.

6. Loan Management Agent: After a loan is issued, the Loan Management Agent takes over ongoing monitoring and servicing. It tracks loan health, provides repayment reminders, processes early repayments, and manages any necessary collateral adjustments. If market conditions change dramatically, this agent can proactively suggest refinancing options or risk reduction strategies before problems occur.

7. Reflection Agent: This agent learns from past loan experiences to optimize future terms. By analyzing successful and unsuccessful loans, borrower behavior patterns, and market conditions that affected loan outcomes, the Reflection Agent continuously refines Malone's decision-making models. This ensures that each new loan benefits from the collective wisdom gained from all previous interactions, making Malone increasingly sophisticated in balancing risk and opportunity.

These agents don't operate in isolation but communicate continuously through a secure orchestration layer, ensuring all decisions are coordinated and consistent. The result is a seamless experience for users, with the complexity of the multi-agent system hidden behind a simple, conversational interface.

Two Ways to Borrow, Unlimited Possibilities

We understand that different users have different needs and comfort levels. That's why we've created a dual approach to borrowing that offers both familiarity and innovation:

Peer-to-Protocol: Advanced Features and Scale

Our traditional borrowing interface provides access to Tren Finance's full suite of advanced features. Behind the scenes, this process is enhanced by our AI agent network, which continuously optimizes risk parameters, interest rates, and collateral factors to ensure maximum capital efficiency and protocol safety.

The Peer-to-Protocol option is ideal for users who:

• Need to facilitate larger loan amounts

• Want to utilize advanced features like Hooks and Flash Mints

• Seek to implement complex DeFi strategies

Peer-to-Agent: Personalized and Flexible

For those seeking a more personalized experience or looking to use non-standard assets as collateral, Malone opens up entirely new possibilities. Through a simple chat interface, you can propose loans against virtually any on-chain asset – from LP tokens to NFTs to project tokens that aren't supported elsewhere.

The Peer-to-Agent option shines for users who:

• Hold diverse or unique digital assets

• Want customized loan terms based on their specific situation

• Prefer a conversational interface over technical parameters

• Seek to negotiate and refine loan terms in real-time

Both approaches leverage the power of our AI agent network, ensuring consistent risk management and user protection regardless of which path you choose. There is no right or wrong way to borrow on Tren Finance, only the way that works best for your individual needs.

Join the Future of DeFi Borrowing

The future of DeFi borrowing isn't peer-to-peer or peer-to-protocol, it's peer-to-agent. By combining the flexibility of human judgment with the efficiency and availability of smart contracts, Malone represents a fundamental evolution in how we access capital in the decentralized economy.

Just as Aave moved over to the pool model as they saw this as the next iteration of borrowing on-chain, we believe that Malone is the next evolution, allowing users to borrow against nearly ANY on-chain asset while receiving personalized terms based on their unique financial history.

Malone takes borrowing a step further by removing friction while adding personalization and expanding asset support beyond what any current protocol can offer. This revolutionary approach transforms how users can unlock the value of their digital assets.

While Malone is not yet live, it's currently in its final stages as we undergo internal testing and tweaking to ensure everything functions correctly. In the coming weeks, we will look to roll this out to the public for use. Stay tuned for more details on our initial launch and how you can be among the first to experience Malone – the revolutionary approach to DeFi borrowing that puts an AI agent in your corner.

About Tren Finance

Tren Finance is the first AI stablecoin borrowing protocol, where a network of specialized agents manages the entire protocol. Our agents work in unison to handle everything from borrowing parameters and liquidations to collateral management and reward distribution, removing human bias from DeFi operations. Through this autonomous system, users can (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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What a difference a year makes. Today, nearly every DeFi project is exploring AI integration in some capacity. But we've stayed true to our original vision: AI agents that go beyond simple automation or basic social media interactions to improve protocol operations.

After months of rigorous development and testing, we're announcing the deployment of our first AI agents on Tren Finance. These agents focus on dynamically adjusting interest rates and borrowing fees as well as conducting asset risk assessments, represents the culmination of our long-held belief that DeFi protocols need more sophisticated, responsive systems for parameter optimization.

Traditional DeFi governance and parameter adjustments move too slowly for today's market dynamics. When liquidity conditions shift or risk parameters need updating, waiting days for governance proposals and votes isn't just inefficient - it's potentially dangerous for protocol stability. Our AI agents address this core problem, enabling real-time, data-driven protocol optimization while maintaining the security and transparency that DeFi users expect.

DeFi protocols today face several challenges that traditional governance and management systems have failed to address effectively.

Take risk management, for instance. When major protocols like Aave are spending millions annually on third-party risk modeling services ($2M to Chaos Labs in 2023-2024 alone), it's clear that the current model isn't sustainable. These costs create an impossible situation for smaller protocols: either allocate a massive portion of their budget to risk management or launch without proper safeguards. Neither option serves the ecosystem well.

We've all seen it - promising new projects stuck in governance limbo, waiting months for their assets to be approved on major lending/borrowing platforms. The traditional approach to risk assessment moves at a glacial pace, requiring extensive manual analysis and multiple governance votes. This bottleneck doesn't just slow innovation, it actively prevents emerging projects from accessing crucial DeFi infrastructure.

Most lending/borrowing protocols today operate on static interest rate models that feel almost antiquated in their rigidity. Picture a highway with a fixed speed limit that doesn't adjust for traffic conditions - that's essentially how many DeFi protocols handle interest rates. The result? Inefficient capital allocation and missed opportunities for both borrowers and lenders.

Perhaps most concerning is what we call the governance paradox: protocols designed for decentralization often end up with highly concentrated decision-making power. When major parameter adjustments require token holder votes, the reality is that these decisions often come down to a handful of large holders, creating exactly the kind of centralization DeFi was meant to prevent.

Our AI agents tackle these challenges head-on, not through complex features, but through practical, real-world solutions. Starting with our first deployed agents focused on interest rate optimization and risk assessments, we're demonstrating how AI can transform DeFi operations:

1. Real-Time Adaptability: Gone are the days of waiting for governance votes to adjust basic protocol parameters. Our AI agents monitor market conditions continuously, making micro-adjustments to keep the protocol running optimally.

2. Cost-Effective Risk Management: By building intelligence directly into the protocol, we eliminate the need for expensive third-party services. Our approach makes sophisticated risk management accessible to protocols of all sizes, while significantly reducing operational costs.

3. Dynamic Capital Optimization: Interest rates and borrowing parameters adjust automatically based on actual usage patterns and market conditions, ensuring capital is always deployed where it's needed most.

4. True Decentralization: By removing human bias from key operational decisions, we're creating a system that's genuinely trustless. The rules are transparent, and the adjustments are based on data, not politics.

TrenOS is our network of specialized AI agents working together to automate and optimize protocol operations. Each agent handles specific responsibilities - from interest rate adjustments to risk management - while communicating with others through a coordinated network structure.

The system consists of three main layers:

• Data Ingestion: Collects and processes real-time protocol metrics and market data

• Agent Network: Our specialized AI agents that handle different protocol functions

• Execution Layer: Implements agent decisions through smart contract interactions

This approach goes beyond basic automation. TrenOS analyzes market conditions, transaction patterns, and protocol metrics in real-time to make data-driven decisions about interest rates and risk parameters. Each action adds to its knowledge base, enabling better responses to market conditions.

Security remains our priority. While our long-term vision aims for full automation, we've implemented a careful, gradual deployment strategy. TrenOS currently operates within a testnet environment with live price feeds synced to Arbitrum's mainnet and human approval for actions, allowing us to validate its decision-making while maintaining security controls. As the system proves its reliability, we'll gradually reduce human oversight, moving toward an autonomous system that can independently manage protocol operations based on predefined parameters and historical data.

While AI in DeFi often means simple automation or basic trading algorithms, TrenOS takes a different approach. Our infrastructure combines advanced AI technologies with decentralized systems to create a truly adaptive protocol. Each decision made by our agents is powered by multiple layers of technology working in concert - from real-time data processing to autonomous execution.

At the heart of this system lies a sophisticated learning engine that grows more intelligent with every transaction. By combining traditional blockchain data with external market insights, our agents can make informed decisions that account for both on-chain reality and broader market context.

TrenOS employs a learning system that grows more intelligent with each protocol interaction. Unlike traditional DeFi systems that operate on static parameters, our agents combine multiple inputs to make informed decisions and continuously improve their performance.

Each agent processes information through six key components: Abilities, Policies, Prior Knowledge, Observations, Past Experiences, and Environment. These elements work together to create a complete picture of the protocol's state and inform decision-making. When an agent needs to make a decision - whether it's adjusting an interest rate or evaluating collateral risk - it draws from all these inputs to determine the optimal action.

For example, when our Interest Rate Optimizer agent adjusts borrowing costs, it doesn't just look at current market conditions. It considers its defined abilities (what parameters it can adjust), established policies (acceptable ranges for changes), prior knowledge (historical rate patterns), real-time observations (market demand), past experiences (outcomes of previous adjustments), and environmental factors (overall market conditions).

This multi-input approach ensures our agents learn from every decision. When the Interest Rate Optimizer makes an adjustment, it tracks the outcome - how borrowers respond, how it affects liquidity, whether it achieves the intended goal. These results become part of the agent's knowledge base, informing future decisions and making the system progressively smarter over time.

Our agents operate in what's known as a swarm system - a design inspired by nature's most efficient problem-solvers like ant colonies and bird flocks. Just as these natural systems achieve complex goals through collaboration, our AI agents work together, each specializing in different aspects of protocol management while communicating and coordinating their actions.

This swarm intelligence approach means that while each agent focuses on its specific role - whether that's managing interest rates or evaluating collateral risk - they share information and adapt collectively to changing market conditions. This collaborative network enables the protocol to handle complex DeFi operations with unprecedented efficiency.

Overview of our Initial Agents

Our first deployed agent automates how we handle interest rates and borrowing fees. Instead of relying on governance votes or manual adjustments that can take days to implement, this agent monitors market conditions in real-time to optimize borrowing costs and protocol stability. When liquidity conditions change or new market opportunities emerge, the agent can adjust rates instantly, ensuring the protocol maintains competitiveness while protecting against potential risks.

Responsibilities

• Balances stablecoin supply and demand through dynamic rate adjustments

• Maintains competitive borrowing costs while managing risk exposure

• Protects protocol liquidity by preventing over-utilization

• Ensures rate stability by implementing gradual, measured changes

Moving beyond traditional risk assessment methods, this agent continuously evaluates collateral assets within our ecosystem. By analyzing real-time market data, liquidity depth, and historical patterns, it can spot potential risks before they impact protocol stability. This dynamic approach allows us to support a wider range of assets while maintaining robust security measures.

Responsibilities

• Provides real-time risk scoring for all supported collateral types

• Adjusts collateral requirements based on market conditions

• Prevents bad debt accumulation through proactive monitoring

• Automates asset onboarding evaluations

The XY Agent manages our synthetic dollar's supply across all protocol modules. Rather than depending on manual intervention during market volatility, this agent actively monitors supply metrics, debt ceilings, and liquidity distribution to maintain XY's stability. When market imbalances occur, the agent can quickly adjust parameters to defend the peg and protect protocol health.

Responsibilities

• Controls XY's monetary policy through automated supply management

• Defends peg stability by adjusting protocol parameters in real-time

• Prevents market manipulation through active monitoring

• Maintains healthy collateralization ratios across modules

The Gauge Agent automates protocol incentive distribution across liquidity pools. Instead of fixed rewards determined by governance votes, our Gauge agent analyzes pool metrics and protocol needs to optimize reward allocation. This ensures capital flows where it's most needed, enhancing overall protocol efficiency.

Responsibilities

• Directs protocol rewards to underserved liquidity pools

• Prevents yield farming exploitation and reward manipulation

• Maintains balanced liquidity across key protocol markets

• Eliminates manual governance from reward distribution

Bridging the gap between complex DeFi operations and user experience, this agent serves as an intelligent guide for protocol interactions. Through natural language processing and predictive analytics, it helps users navigate protocol features while avoiding common pitfalls and risks.

Responsibilities

• Reduces technical barriers to protocol participation

• Provides real-time risk alerts and position monitoring

• Guides users through complex DeFi strategies

• Enables proactive portfolio management

This agent ensures the integrity of all liquidity positions within the protocol. Through continuous monitoring and verification, it prevents common DeFi exploits while maintaining transparent capital allocation. This creates a more secure environment for liquidity providers while optimizing capital efficiency.

Responsibilities

• Verifies and tracks all liquidity provider positions

• Prevents fraudulent activities like wash trading

• Automates LP token issuance and management

• Ensures accurate liquidity reporting across markets

Acting as the central coordinator for our entire agent network, this agent ensures all protocol components work in harmony. It aggregates insights from other agents, resolves potential conflicts, and maintains protocol-wide optimization through real-time adjustments.

Responsibilities

• AI-Agent Collaboration – Ensures that individual AI agents work in unison rather than in isolation.

• Protocol Health Optimization – Balances risk, incentives, and liquidity parameters for long-term stability.

• Real-Time Governance Adjustments – Streamlines governance decisions based on global AI insights.

• System-Wide Performance Analysis – Identifies inefficiencies in the lending, risk, and incentive mechanisms.

• Self-Improving AI Network – Uses feedback loops to continuously refine AI-driven governance and economic models.

Our journey toward a fully autonomous DeFi protocol follows a carefully planned progression. With testnet and initial devnet deployment now complete, we're entering an exciting phase in TrenOS's development.

1. Testnet (Completed): The foundation has been established. We've successfully deployed the protocol on Sepolia testnet, gathered valuable feedback through closed access testing with our community, and completed comprehensive security audit by Omniscia.

2. Devnet Phase 1 (Completed): We've expanded core protocol functionality with advanced features including LP token support, vault tokens support, custom price feeds, leverage hooks, flash repay hooks, and flash minting capabilities. This phase was secured with additional audits from Zokyo and Halborn.

3. Devnet Phase 2 (Current Focus): We're now integrating our AI agent network in a staged testnet environment synchronized with Arbitrum's mainnet. This phase centers on developing our core AI agents: the Interest Rate agent, Asset Risk Analyst agent, XY manager agent, and Collateral Manager agent – all working with live price data to validate their decision-making capabilities.

4. Mainnet Launch (Upcoming): The initial launch of Tren Finance on mainnet will bring together all our work with the TREN community sale and TGE, XY Token Generation Event, introduction of the Ecosystem agent, deployment of the Treasury agent, and API access for third-party protocols.

Our ultimate goal is to evolve Tren Finance into TrenOS, a fully autonomous operating system designed for DeFi – a unified protocol where AI agents handle all financial operations in real-time, enabling seamless interaction with the entire DeFi ecosystem through a single, intelligent interface.

The deployment of our AI agents is just the beginning of a much broader vision. While today's TrenOS will manage core protocol operations, we're building toward a future where it becomes the operating system for DeFi itself - a system that can respond to and execute almost any on-chain request in real-time.

Imagine wanting to borrow against a newly launched token. Today, you'd need to wait weeks or months for traditional protocols to add support through governance proposals and risk assessments. With TrenOS's future iterations, you could simply make the request, and our agents would analyze the token, establish risk parameters, and create a custom isolated module, all within minutes.

This level of automation and flexibility represents a fundamental shift in how DeFi protocols can operate. By removing traditional barriers and delays, we're working toward a future where capital efficiency isn't limited by governance bottlenecks or manual processes.

The deployment of our Interest Rate Optimizer agent marks our first step toward this vision. Each subsequent agent release will bring us closer to a truly responsive, user-centric DeFi ecosystem. We're committed to careful testing and gradual rollouts, ensuring each component meets our high standards for security and reliability.

For those interested in diving deeper into the technical architecture and capabilities of our AI agents, we've published comprehensive documentation detailing each component of TrenOS. Join us in building the next generation of DeFi infrastructure, where intelligence meets automation to unlock new possibilities for everyone.

Tren Finance is the first AI stablecoin borrowing protocol, where a network of specialized agents manages the entire protocol. Our agents work in unison to handle everything from borrowing parameters and liquidations to collateral management and reward distribution, removing human bias from DeFi operations. Through this autonomous system, users can (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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What are Hooks?

Hooks are modular, programmable extensions integrated into smart contracts that allow developers to insert and execute custom logic at predetermined points during a transaction's lifecycle. These predetermined points, often referred to as hook points, act as checkpoints where specific actions can be triggered. This concept is similar to middleware or plugin systems in traditional software, where additional functionalities can be layered onto existing applications without altering their core logic. Hooks enable protocols to become more flexible, customizable, and interoperable, all without requiring significant overhauls of the core codebase.

Hooks first gained widespread attention when Uniswap described them in their upcoming v4 architecture design. In Uniswap v4, hooks will become a foundational concept for creating customizable Automated Market Maker (AMM) pools. Developers can design unique liquidity strategies, such as dynamic fee adjustments, and time-weighted pools, by incorporating hooks into the pool lifecycle. Throughout this article, we’ll take a look at how hooks function, how some notable protocols use hooks, and what it all means for Tren Finance.

Modularity Hooks are designed as self-contained, reusable pieces of logic. This modularity allows developers to integrate additional functionality into existing protocols without requiring complete redesigns or redeployments. For example, hooks might enable the addition of dynamic fee adjustments or automated collateral rebalancing in lending platforms.

Programmability Hooks support the incorporation of arbitrary, developer-defined logic. This makes them incredibly versatile, allowing for advanced features like automated strategies, and conditional executions (e.g., execute a trade only if specific market conditions are met).

Transaction Lifecycle Integration Hooks can be placed at various stages of a transaction's lifecycle. Pre-transaction hooks can be used to validate inputs or check external conditions before the primary transaction logic is executed. During the transaction, Hooks can be used to dynamically influence the transaction as it is processed, such as adjusting parameters based on real-time data.

Flexibility By allowing developers to tailor transaction behavior, hooks enable protocols to cater to diverse user needs and adapt to changing market conditions without requiring fundamental architectural changes.

Customizability Protocols can expose hook interfaces to allow users, DAOs, or other third parties to inject their logic. For example, a liquidity provider could use a hook to set specific criteria for withdrawing liquidity, such as triggering only when market volatility surpasses a threshold.

Interoperability Hooks facilitate seamless integration with other DeFi protocols, enabling features like flash loans, cross-chain interactions, and multi-step transactions. This enhances composability, which is still something that the DeFi ecosystem as a whole needs to improve upon.

Enhanced User Experience

Hooks enable users to customize how they interact with protocols, such as automating routine tasks or optimizing strategies for specific assets.

Rapid Iteration and Experimentation

Developers can use hooks to test new features without deploying entirely new smart contracts, fostering quicker innovation cycles.

Ecosystem Growth

By enabling interoperability, hooks make it easier for protocols to integrate and leverage each other's functionalities, improving existing DeFi composability.

Risk Mitigation

Hooks can introduce safeguards, such as pre-checks for market conditions, enhancing security and resilience for users.

Uniswap's upcoming v4 architecture introduces Hooks, which are designed to enhance the flexibility and functionality of its AMM Liquidity Pools.

Enhanced Liquidity Pool Functionality

With Hooks, developers can implement smart contracts that execute before and after key pool actions, such as initialization, adding or removing liquidity, and swaps. This integration allows for customized behaviors tailored to specific use cases. Developers can also enable pools to modify swap fees dynamically based on factors like market volatility or trading volume, optimizing fee structures to enhance capital efficiency and better respond to market conditions.

For traders, Hooks facilitate the implementation of TWAMM strategies, which decompose large orders into smaller, time-distributed trades to minimize market impact and reduce slippage. One of Uniswap’s most requested features since its inception, limit orders, was also enabled through Hooks. Developers can introduce native limit order functionality, allowing users to execute trades at predetermined price levels without relying on external systems.

Other features that can be introduced through Hooks are custom oracles, and auto-compounding. Custom oracles allow for bespoke on-chain oracles, providing real-time pricing data and other metrics to inform pool behavior and enhance decision-making. Auto-compounding automates the reinvestment of accrued fees back into liquidity positions, streamlining the compounding process and maximizing returns for liquidity providers.

Balancer is currently utilising Hooks on its DEX, in similar ways that have been outlined in Uniswap’s upcoming v4 architecture.

Enhanced Liquidity Pool Functionality

By implementing hooks, Balancer allows developers to introduce bespoke behaviors into existing pool types. For instance, hooks can be used to adjust swap fees dynamically based on market conditions or user-specific criteria. This extensibility facilitates the creation of tailored AMM strategies that cater to diverse user needs.

Balancer's architecture supports hooks that execute before and after core operations such as adding liquidity, removing liquidity, and swapping tokens. This integration allows for actions like input validation, dynamic parameter adjustments, and post-transaction processing, enhancing the protocol's responsiveness and security.

Hooks also enable pools to compute dynamic swap fees by evaluating real-time data during transactions. For example, a pool can implement a hook that reduces swap fees for users holding specific governance tokens, thereby incentivizing certain behaviors and fostering community engagement.

By allowing these dynamic adjustments, hooks can optimize liquidity provision and fee structures, leading to more efficient capital utilization for liquidity providers and traders.

Init capital is a lending protocol that democratizes access to liquidity for both decentralized applications (dApps) and individual users through its innovative Liquidity Hooks. These hooks act as modular plugins, enabling seamless integration with INIT's liquidity pools.

Liquidity Hooks

Liquidity Hooks allow dApps to connect with INIT's liquidity pools effortlessly. By developing smart contracts that 'hook' into INIT, dApps can access liquidity in a permissionless manner. This architecture supports various yield strategies, including vaults, leveraged farming, margin trading, and more, enabling dApps to focus on their core offerings without liquidity constraints.

By building Liquidity Hooks, dApps can source liquidity from INIT without the need to bootstrap or maintain their own liquidity pools. This integration reduces the overhead associated with liquidity management and allows dApps to concentrate on developing innovative yield strategies.

For users, Liquidity Hooks allow for easy access and management of various yield strategies through INIT's interface, providing streamlined visibility and enhanced control over their investments. This centralized access eliminates the need to navigate multiple platforms.

Hooks on Tren Finance are used to open up a variety of yield-enhancing and cost-saving strategies for users. These include many of the Hooks functionalities from other protocols that have been described above. For Tren Finance, they are designed to automate and optimize various DeFi strategies by attaching bespoke smart contracts to isolated modules.

Most importantly, Hooks on Tren Finance will allow users to participate in staking and farming activities while also using their deposited tokens as collateral for loans or leveraged positions. This approach resolves a common challenge in many money markets, where LP tokens are typically ineligible as collateral because they must remain staked to earn rewards. Traditionally, users had to choose between unlocking capital for liquidity or staking LP tokens to generate returns. Hooks remove this limitation, enabling both functions to operate simultaneously.

Enhanced Capital Efficiency

Hooks unlock additional liquidity by allowing assets to serve multiple functions simultaneously, such as earning staking rewards while being used as collateral.

Customizable Strategies

Users can implement tailored investment strategies that align with their risk tolerance and return objectives.

Improved User Experience

Automated processes reduce the need for manual intervention, simplifying complex DeFi interactions.

Interoperability

Hooks facilitate seamless integration with other DeFi protocols, expanding the range of potential strategies and opportunities.

The Looping Leverage Hook uses Tren Finance’s FlashBorrow functionality, allowing users to borrow an asset and return collateral within a single transaction. With this, users can gain high leverage on assets in just one-click, leading to a number of potential strategies for yield optimisation.

In the example above, a user wants to gain a 5x levered position on PT-USDe. Tren Finance calculates the XY needed for the user’s desired position, and XY is FlashBorrowed based on the amount required to attain the user’s desired PT-USDe position. After the FlashBorrowed XY is used to acquire PT-USDe, the PT-USDe is then used to borrow XY in order to repay the FlashBorrow loan.

Benefits -

Efficiency: Executing the entire leveraging process within a single transaction reduces gas fees and operational complexity.

Maximized Yield: By increasing exposure to yield-generating assets, users can potentially enhance their returns. In the example used below, the user would gain roughly 5x the typical yield on PT-USDe.

Automation: The hook automates repetitive steps, streamlining the user experience and minimizing manual intervention.

The Rebase Token Wrapper Hook is a mechanism designed to enhance the usability and integration of rebase tokens within Tren Finance, and potentially other DeFi ecosystems. Rebase tokens, such as Aave’s aTokens, dynamically update balances in real time to reflect accrued interest. This can pose challenges for protocols that expect static token balances. The Rebase Token Wrapper Hook addresses these challenges by encapsulating rebase tokens within a wrapper. With aTokens, for example, the underlying balance of aTokens grows over time, but the wrapper maintains a static representation, allowing seamless integration with Tren Finance and other protocols.

Benefits -

DeFi Compatibility: Most protocols are not built to be able to integrate rebasing tokens. Through the wrapper hook, these tokens are able to be integrated onto Tren Finance, and allows them to be integrated into other DeFi protocols as well.

Simplicity: The wrapper hook is simple and easy to understand for users. The wrapped tokens maintain a constant balance in the user's wallet after they have been deposited onto Tren Finance. Once a user initiates a withdrawal, the amount of rebase tokens returned reflects any supply adjustments from accrued yield that occurred during the wrapping period.

The Auto-Rollover Hook is a mechanism designed to automate the renewal or extension of time-bound positions, such as fixed-term deposits or expiring contracts, within DeFi protocols. This automation ensures that users maintain continuous exposure to their chosen positions without the need for manual intervention at each expiration.

How does this work? First, the Auto-Rollover Hook tracks the expiration timelines of user positions. If the user has enabled the Auto-Rollover Hook, the hook automatically renews the position upon expiration, reinvesting the principal (and potentially the accrued interest) into a new term or contract.

Benefits -

Continuous Investment Exposure: Users maintain uninterrupted participation in their chosen positions, maximizing potential returns.

Efficiency: Eliminates the need for manual renewals, saving users time and reducing the risk of missed opportunities due to lapsed positions.

Reduced Transaction Costs: Automating the rollover process minimizes transaction fees associated with closing and reopening positions manually.

The Auto-Compounder Hook is a mechanism designed to automate the reinvestment of earned rewards or yields back into a user's principal position. This process, known as compounding, enhances and optimizes yield growth by continually increasing the investment base without requiring manual intervention.

How does this work? As users participate in yield-generating activities (e.g., staking, liquidity provision), they earn rewards over time. The Auto-Compounder Hook periodically collects these accumulated rewards. Collected rewards are converted into the original investment asset, if necessary. The converted rewards are automatically reinvested into the user's principal position, increasing the overall amount of assets generating yield. This cycle repeats at regular intervals, ensuring that earnings are consistently reinvested to maximize compound interest over time.

Benefits -

Enhanced Returns: By automatically reinvesting earnings, users can achieve higher returns through the power of compound interest.

Time Efficiency: Eliminates the need for manual intervention, allowing users to benefit from compounding without active management.

Cost Savings: Automated processes can reduce transaction fees associated with manual reinvestment.

User-Friendly Experience: Simplifies the re-investment process, making it more accessible to users who may not be familiar with manual compounding strategies.

We’ll take a look at how the Router Hook works in the example used for the Looping Leverage Hook. In the step where the FlashBorrowed XY is used to acquire PT-USDe, the Router Hook kicks in. Here, the Router Hook finds the optimal pathway for swapping XY to PT-USDe. It’s easy to think of the Router Hook as an aggregator, in that it analyses pathways to find the best and most cost-efficient pathway before executing the transaction.

A key difference from a typical aggregator however, is the Router Hook’s ability to determine and execute the groundwork necessary before making a swap. For example, if there was a request to swap aUSDT to XY:

1. Check if there is sufficient liquidity to directly swap from aUSDT

2. If not, go to Aave to withdraw USDT from the aUSDT

3. Swap USDT to XY

Benefits -

Dynamic Flexibility: The Router Hook allows for real-time decision-making, optimizing routes and execution paths based on evolving market conditions and liquidity depth

Improved Efficiency: Automating routing decisions and optimizing transaction pathways reduces operational complexity and potentially minimizes gas costs.

Composability: The Router Hook facilitates seamless integrations across protocols, enabling complex multi-step workflows and enhancing interoperability within DeFi.

User-Friendly Automation: Users benefit from streamlined processes where optimal pathways are executed without requiring manual intervention or technical expertise.

The Tren Finance is now live on Arbitrum at app.tren.finance with the following two assets available as collateral:

• USDC/USDM Curve LP Token

• 2BTC-ng Curve LP Token

Details regarding our mainnet launch and our journey here so far can be found in this blog. The Auto-Compounder Hook is currently live on the two assets mentioned above. As the protocol continues to develop, we’ll list more assets, along with suitable Hooks for each of those assets to make for the most efficient and cost-saving user experience.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralise their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Our Liquidity Generation Event was the first step that marked an important milestone in this journey. The response and engagement from our community validated what we've known all along - there's a genuine need for infrastructure that makes existing DeFi assets work harder. As our Single Sided Liquidity program continues to bootstrap liquidity for XY, we're ready for the next chapter in Tren Finance's evolution: our mainnet launch.

The DeFi space has grown accustomed to a familiar pattern: protocols launch with massive incentives, attract millions in TVL within days, then struggle to maintain that momentum once the incentives dry up. While rapid growth can be exciting, we believe it often comes at the expense of long-term sustainability.

We're taking a more measured approach with our launch. Instead of chasing immediate TVL growth, we're focused on building a foundation that can support sustainable, long-term growth. This means starting with a carefully selected set of assets, thoroughly testing each component in a production environment, and gradually expanding our offerings based on real user feedback and demand.

This approach might mean slower initial growth, but we believe it's the right way to build a protocol that users can trust with their assets. After all, we're not just building another DeFi protocol - we're creating a protocol that we hope will become a cornerstone of DeFi capital efficiency.

Our journey to mainnet has been one of continuous evolution and discovery. When we started building Tren Finance, we initially set out to create a lending protocol that could handle volatile assets. But as we developed our infrastructure and risk management systems, we discovered something unexpected – we had built a foundation perfect for unlocking the billions of dollars currently sitting idle in DeFi protocols.

This realization led to our first pivot: shifting from a traditional lending market to a CDP model where we could act as the sole lender. This change allowed us to focus on what really mattered – building infrastructure that enhances the entire DeFi ecosystem rather than competing with established players.

The reality we faced was clear: DeFi doesn't need another Aave or Compound competitor. What it needs is infrastructure to make existing assets work harder. With over a third of DeFi's TVL locked in protocols, generating yield but unable to be used productively elsewhere, we saw an opportunity to create something truly innovative.

At launch, we're focusing on three core components that form the foundation of our protocol:

• Isolated modules: Our isolated module architecture allows users to deposit collateral and borrow XY in risk-contained environments. Each asset type operates in its own independent market, preventing contagion risk while enabling customized risk parameters for different asset types. This approach allows us to support diverse assets while maintaining system security.

• Insurance pool: The Insurance Pool serves as our primary defense against bad debt, allowing users to stake XY and earn rewards while providing a crucial backstop for the protocol. Insurance providers can earn additional yield through liquidations, creating a sustainable economic model that aligns incentives between different stakeholder groups.

• Hooks: Our Hooks enables automated strategies through customizable smart contracts, allowing for features like auto-compounding yields, cross-protocol strategy execution, and position management. This system forms the backbone of our vision for making idle assets work harder.

We've prioritized security at every step of our development process. Our security measures go beyond standard audits, incorporating multiple layers of protection through our isolated module architecture, careful risk parameter calibration, and robust testing frameworks.

We're proud to have worked with some of the most respected names in DeFi security:

• Omniscia conducted our first comprehensive audit in October 2024, focusing on our core protocol mechanics and risk management systems

• Zokyo performed an in-depth review in November 2024, with particular attention to our single sided liquidity contract required for our liquidity generation event

• Halborn completed our final pre-launch audit in January 2025, focusing on our hooks and providing additional validation of our security measures

These audits have not just been a box-ticking exercises – they've helped us refine and strengthen our protocol through multiple iterations. We've implemented every critical and high-severity recommendation, and continue to work on optimizing based on auditor feedback.

Our initial asset selection reflects our commitment to launching thoughtfully and securely. We've chosen to start with two Curve LP positions that showcase the full potential of our protocol while maintaining conservative risk parameters. These assets demonstrate how Tren's hooks can enhance yield on traditionally "idle" LP positions, allowing users to maintain their existing yield while unlocking additional utility through borrowing. Each asset has been carefully evaluated through our risk framework and configured with parameters that ensure protocol safety while maximizing capital efficiency.

This Curve pool combines the stability of USDC with USDM's yield-generating capabilities. The pool maintains deep liquidity and offers consistent base returns from trading fees (2.02% weekly vAPY). Through our Hook system, when users deposit their LP tokens as collateral on Tren, the hooks automatically stake these tokens into Curve's gauge contract - allowing users to earn both trading fees and USDM gauge rewards (14.8% tAPR) while their LP tokens are being used as collateral. The hooks then automatically compound all these rewards back into the user's collateral position, maximizing their yield without requiring any manual intervention.

The 2BTC-ng pool, combining Threshold's tBTC and WBTC, offers users Bitcoin exposure while generating yield through trading fees. With $4 in TVL, this pool represents the growing intersection of native and wrapped Bitcoin in DeFi, providing opportunities for arbitrage and yield generation. When users deposit their LP tokens as collateral on Tren, our hooks automatically stake these tokens into Curve's gauge contract, allowing users to continue earning both trading fees (0.48% weekly vAPY) and CRV rewards (3.48% base tAPR) while maintaining their borrowed position. These rewards are then automatically compounded back into the user's collateral position, enabling users to maximize their returns without any manual intervention.

Our launch is just the beginning of our journey to unlock DeFi's idle liquidity. Here's what users can expect in the coming months:

• Leverage: We're introducing leveraged positions to allow users to amplify their yields through our recursive borrowing engine. This feature will enable users to achieve higher capital efficiency while maintaining careful risk management through our isolated module architecture.

• Collateral-Based Loan Repayment: This feature will allow users to repay their loans using their collateral assets, providing greater flexibility in position management and reducing the need to maintain large stablecoin balances for loan repayment.

Once the TREN token launches, we will introduce several key protocol elements:

• veTREN: Our vote-escrowed governance token system will allow users to lock TREN for voting rights and enhanced protocol rewards. This mechanism is designed to align long-term incentives between the protocol and its users.

• Governance: We're implementing a comprehensive governance system that will give our community direct input into protocol decisions, from risk parameters to new asset listings. This system will be gradually rolled out to ensure stable and secure transition to community governance.

We're committed to expanding our asset offerings on Arbitrum thoughtfully and systematically. Rather than rushing to list every possible asset, we'll be working closely with our community to identify which assets would provide the most value to our users.

We're particularly excited about potential partnerships with projects whose users could benefit from unlocking the value in their idle positions. These collaborations will be crucial in our mission to make DeFi more capital efficient.

Our mainnet launch marks the beginning of us building in public. We invite you to join us in creating a more efficient, interconnected DeFi ecosystem where every asset can work harder.

Disclaimer: All APY and TVL figures shown are accurate at the time of writing and are subject to change.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralise their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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What is Restaking?

To fully understand restaking, we first need to look into the history of liquid staking:

As a Proof-of-Stake (PoS) network, Ethereum requires a broad and distributed set of validators to secure the network. Validators are responsible for proposing and validating blocks, ensuring network consensus. Liquid staking protocols lower the barriers to entry for staking by enabling users to participate without running their own validator nodes (which requires 32 ETH and technical expertise). This increases the total amount of ETH staked, strengthening Ethereum’s security by distributing network control across a larger pool of participants.

Liquid Staking Tokens (LSTs) arose largely out of the desire for capital efficiency. Traditional staking, while necessary for network security and decentralization, introduced significant limitations by locking up capital for extended periods, rendering it inaccessible for other uses. LSTs emerged as a solution to this inefficiency, enabling stakers to maintain liquidity while still participating in network staking.

Before the advent of Liquid Staking Protocols, stakers earned rewards but couldn’t use their staked assets for other opportunities, such as trading or lending. Locked assets in staking also meant users couldn't leverage their capital effectively to participate in other DeFi activities like yield farming, or liquidity provision. Users sought ways to earn staking rewards while simultaneously utilizing their capital for additional returns in DeFi protocols. This desire to "double dip" became a key driver for liquid staking solutions.

In December 2020, Lido launched stETH, which has become the most widely used LST with a TVL of over $38B. Through Lido, users could stake their ETH on Ethereum’s Beacon Chain and receive stETH as a liquid representation of their staked ETH.

Eigenlayer launched in June, 2023, kicking off a move towards even greater capital efficiency through restaking. Restaking allows LSTs to be reused to secure additional networks, protocols, or applications. To explain how this works, let’s say a user stakes their ETH through Lido and receives Lido Staked ETH (stETH). This stETH can now be staked again (restaked) for higher yields, and the user will receive a liquid restaking token (LRT). This is typically done through liquid restaking protocols such as Etherfi, which initiate the restaking process on Eigenlayer on behalf of the user, and give users the protocol’s LRT (eETH in the case of Etherfi).

How do LRTs generate higher yield? On top of the base staking rewards that LSTs generate from securing Ethereum’s PoS network, LRTs also generate yield through EigenLayer's Active Validation Services (AVS). AVS enables restaked Ethereum assets to perform specific functions or provide security for other networks, protocols, or decentralized applications (dApps). This mechanism extends the utility of Ethereum’s staked ETH by allowing validators and their capital to actively contribute to new services while still participating in Ethereum’s Proof-of-Stake (PoS) network.

Each protocol using EigenLayer’s AVS can define its specific validation requirements or security needs, which validators fulfill through AVS. For example, a rollup might require validators to verify transaction batches, or a data availability layer might need validators to attest to the accessibility of stored data. New projects can leverage EigenLayer’s AVS to borrow security from Ethereum’s established validator network, reducing the need for independent validator sets.

Markets are driven by a constant demand for greater capital efficiency. The evolution from LSTs to LRTs, and the continuously developing landscape of LRT protocols illustrate this point. Users can deposit ETH directly into LRT protocols, bypassing the need to first acquire LSTs as LRT protocols will automatically perform this step for users. In a short timespan, most ETH-based derivatives were able to be deposited and used on LRT protocols.

Now, even non ETH-based assets can be restaked. Protocols like Symbiotic and Etherfi have enabled this, allowing for broader participation and a diverse range of assets to participate in securing networks and generating yield. This is a massive step towards capital efficiency, as it allows previously idle assets to be used in a beneficial way and generate yield.

At Tren Finance, we have observed this continuous evolution, and we believe that the next step is recollateralisation.

Recollateralisation is the process of utilizing idle liquidity assets as collateral for DeFi activities, thereby unlocking their liquidity. As we’ve discussed so far, we’re seeing DeFi move continuously towards greater capital efficiency. Imagine if you could take not just LSTs and LRTs, but also LP tokens, money market deposit tokens, and PT tokens as collateral to unlock liquidity. This has the potential to unlock $34B+ in idle liquidity, and we believe this is the next step in DeFi.

So how does recollateralisation work? It’s easier to explain via the use cases below:

Users deposit their LP tokens into Tren Finance's protocol. These LP tokens represent their share of liquidity in the AMM pool and continuously earn trading fees and rewards. Tren Finance evaluates the liquidity and value of these LP tokens. The tokens are then used as collateral to borrow Tren Finance’s synthetic dollar debt token, XY. Borrowed XY can be used to deploy in other DeFi strategies such as impermanent loss hedging, or simply to acquire other assets. Users can also employ a looping leverage strategy, amplifying exposure to the AMM pool and increasing yield potential from trading fees and rewards.

We’ll show an example of how this works with Curve’s 3pool LP token:

Users deposit assets into a money market protocol like Aave or Compound. In return, they receive receipt tokens (e.g. aETH, cUSDC). Users can deposit these receipt tokens into Tren Finance, which are accepted as collateral and can be used to borrow XY. Through this, users gain access to liquidity without having to withdraw their deposits from lending protocols. By using Hooks, users can employ a recursive leverage strategy to leverage their money market deposit tokens, and multiply their yield.

We’ll show an example of how this works with Aave’s aWETH deposit token:

Tren Finance enables liquid staked assets to be used as collateral, such as LSTs and LRTs, but also assets like Pendle’s PT tokens. Similarly to the other use cases, these assets can be used to borrow XY. Users continue to earn yield from their staked positions, while unlocking their liquidity at the same time. If a user feels that the yield from their staked or restaked position isn’t enough, they can use Tren Finance to leverage their positions and multiply their yield.

We’ll show an example of how this works with Pendle’s PT-sUSDe token:

One underestimated use case of Tren Finance is the ability for users to use the protocol as their own custom on-chain market maker. It’s a simple process that any user can use, but opens up a wide range of customisation opportunities without having to rely on external parties. For example, a concentrated liquidity position in UniswapV3 for ETH-USDT within a selected price range to maximize capital efficiency, receiving an LP NFT to represent their position. The user deposits their concentrated LP NFT as collateral in Tren Finance to borrow XY while maintaining liquidity provision rewards. Users can now maintain their liquidity rewards while reducing impermanent loss exposure through hedging. Users can also explore automated position management opportunities through Tren Finance’s Hooks.

We envision that what liquid staking and restaking did for ETH, Tren Finance will do for LP tokens, receipt tokens, and other idle liquidity assets.

There are obvious key differences between restaking and recollateralisation. Restaking is primarily used for securing networks, and enables assets to be used to secure multiple networks simultaneously. Recollateralisation functions more like a lending engine, allowing for the reuse of collateral from various protocols to unlock previously idle liquidity, and optimize asset utilization. Despite these differences, both of them have one overarching goal: maximize the productivity of assets and increase capital efficiency. As we have seen restaking take off this year, we believe that the recollateralisation movement is the next step in DeFi evolution.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralise their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Traditional liquidity provision in DeFi has always come with significant friction - users need to acquire multiple tokens and manage complex positions. Our SSL reimagines this process.

Instead of requiring users to provide both sides of a liquidity pair, the SSL contract enables participation with just stablecoins. When you deposit USDT, the protocol automatically mints an equivalent amount of XY (our synthetic dollar debt token) to complete the pair. This seemingly simple innovation creates powerful advantages:

• Double the capital efficiency of traditional LP positions

• Eliminate the complexity of managing multiple tokens

• Maintain exposure to your original stablecoin deposit

• Earn TREN while preserving your USDT position

Think of it like having a multiplier for your capital - your single stablecoin deposit is effectively doubled in terms of its liquidity provision power, all while maintaining a familiar, stable asset base that you understand.

If you've been following DeFi's evolution, you'll know Gamma as the protocol that transformed how we think about concentrated liquidity management. When Uniswap V3 introduced concentrated liquidity in 2021, it created new opportunities for capital efficiency but also brought significant complexity. Many users struggled with position management, impermanent loss became more pronounced, and protocols found it challenging to maintain healthy liquidity for their tokens.

Gamma solved these challenges by developing liquidity management strategies that could be accessed through an intuitive interface. Their system actively manages positions to optimize fee generation while minimizing impermanent loss, making complex DeFi strategies accessible to everyone. This combination of technical sophistication and user-friendly design has made them the go-to solution for both retail users and major protocols looking to optimize their liquidity provision strategies.

Gamma's battle-tested infrastructure forms the backbone of our position management system. Their proven architecture helps ensure that all SSL positions are efficiently managed and monitored.

On December 17th, users will be able to participate in our Liquidity Generation Event through Tren’s platform. Our interface has been specifically designed to maximize capital efficiency through our SSL.

When depositing USDT for the LGE, our minting mechanism significantly amplifies your liquidity position. For every USDT deposited, our protocol automatically mints an equivalent amount of XY, effectively doubling your total liquidity. For example, when you deposit $500 USDT, we mint $500 worth of XY, creating a $1,000 liquidity position that immediately begins earning rewards.

The process has been designed with simplicity in mind while leveraging Gamma's proven infrastructure for position management. This combination ensures that your enhanced liquidity position is professionally managed, optimizing for both security and performance.

On December 17th, Tren Finance will launch its Liquidity Generation Event on Arbitrum, establishing the foundation needed to unlock billions in idle assets through (re)collateralization.

The technical infrastructure is ready, combining our capital-efficient SSL contract with Gamma's battle-tested position management system. Through Tren's native interface, users will benefit from our unique XY minting mechanism that maximizes the potential of every deposit.

The future of DeFi demands infrastructure that's both sophisticated and accessible. Your participation in the LGE will help build the groundwork for a more efficient and interconnected ecosystem.

For more details about our Liquidity Generation Event, including APY projections and reward structures, check out our previous article here.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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The traditional approach to liquidity bootstrapping often involves complex requirements and unclear reward structures. We're taking a different path - one that prioritizes simplicity, transparency, and capital efficiency. Through our Single Sided Liquidity (SSL) contract, we're introducing a mechanism that not only simplifies participation but also maximizes the effectiveness of every dollar contributed.

At the heart of our LGE lies the Single Sided Liquidity (SSL) program, a mechanism that fundamentally changes how users participate in liquidity provision. While traditional approaches require users to provide equal amounts of two tokens, our SSL program allows participants to deposit only USDT, significantly reducing complexity and capital requirements.

When a user deposits USDT into the SSL contract, a series of operations occurs behind the scenes. The protocol mints an equivalent amount of XY tokens, which are then paired with the deposited USDT to create a liquidity position. This 1:1 minting ratio ensures perfect parity between XY and USDT at launch, while automated position management through Gamma maintains stability during market operations.

For example, when a user deposits 1,000 USDT:

• The SSL contract secures their USDT deposit

• An equivalent 1,000 XY tokens are minted

• A managed liquidity position worth $2,000 is created

• TREN rewards begin accruing immediately

This process effectively doubles the user's liquidity exposure while maintaining the simplicity of a single token deposit.

Unlike many recent DeFi launches that rely on point systems with unclear conversion rates, our LGE offers complete transparency in rewards. From the moment of deposit, participants earn actual TREN tokens - not points or promises. These rewards are calculated and updated every second using our modified MasterChef contract implementation.

Our emission schedule is precisely defined:

• Monthly base emissions: 2.5 million TREN tokens (0.25%)

• Monthly bonus emissions: 500,000 TREN tokens (0.05%)

• Total monthly distribution: 3 million TREN tokens

• Program duration: 18 months

• Total allocation: 5.40% of TREN's total supply

Based on our tokenomics model and projected TVL scenarios, participants can expect varying levels of returns. Using a Fully Diluted Valuation of $40M USD, we project the following annual percentage yields:

These projections account for both base rewards and compound returns from trading fees. The inverse relationship between TVL and APY ensures early participants benefit from higher initial returns while maintaining sustainable rates as the protocol grows.

The SSL program streamlines the entire liquidity provision process. Users can deposit USDT with no minimum requirement and no maximum cap, ensuring accessible participation while maintaining capital efficiency. While there are no lock-up periods, we've implemented a 14-day withdrawal notice period for stability reasons. This feature protects all participants by ensuring orderly position management and preventing potential market manipulation.

Once a user initiates a withdrawal:

• TREN rewards stop accruing immediately

• The 14-day withdrawal period begins

• Position remains in the liquidity pool during this period

• Users may receive more stablecoins than initially deposited due to accumulated fees

Prior to initiating withdrawal, rewards in TREN are earned continuously, calculated and distributed every second based on deposit size and duration. While users can track their accruing rewards in real-time, the claim function will be activated after the Token Generation Event (TGE). Once implemented, users can claim their earned TREN tokens at their convenience.

Through integration with Gamma's infrastructure, every liquidity position benefits from institutional-grade management. Our system continuously monitors market conditions and adjusts positions to optimize for both fee generation and impermanent loss mitigation. This sophisticated management happens automatically, requiring no active intervention from participants.

The management system considers multiple factors:

• Market volatility patterns

• Trading volume distribution

• Fee accumulation rates

• Gas efficiency for position adjustments

Security forms the cornerstone of our LGE infrastructure. Our contracts have undergone rigorous auditing by leading blockchain security firms:

The core SSL contracts have been independently audited by Zokyo, while our integration with Gamma's infrastructure benefits from multiple security audits by:

• OpenZeppelin

• ConsenSys Diligence

• Arbitrary Execution

The LGE serves a focused purpose: establishing deep and stable liquidity for XY ahead of our mainnet launch on Arbitrum. This foundation of liquidity is essential for the protocol's core functionality.

Starting December 17th, participants can provide liquidity through our platform's capital-efficient mechanism. When using Tren Finance's frontend, users benefit from our unique minting system where a $500 USDT deposit results in a $1,000 liquidity position through automated XY minting. This approach effectively doubles your liquidity exposure without requiring additional capital - maximizing returns while maintaining the simplicity of a single token deposit.

The future of DeFi demands robust, efficient infrastructure. The LGE lays the groundwork for Tren Finance's vision of unlocking billions in idle assets through our (re)collateralization protocol. Whether you're an experienced liquidity provider or new to DeFi, we invite you to join us in this crucial phase of Tren Finance's evolution on Arbitrum.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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The Evolution of Capital Efficiency in DeFi

DeFi's journey toward capital efficiency has been marked by continuous innovation, with each milestone representing a significant leap forward in how users can deploy their digital assets. From Compound's introduction of basic lending markets in 2017 to EigenLayer's restaking revolution in 2023, the ecosystem has consistently evolved to unlock new possibilities for capital deployment.

Yet despite these advancements, a fundamental problem persists: over a third of DeFi's total value locked remains idle, with 90% concentrated in just the top 30 protocols. This concentration and underutilization represents a massive inefficiency in how capital is deployed across the ecosystem. While protocols have individually innovated - from Maker's multi-collateral system to Uniswap's standardized LP tokens during DeFi Summer, and later advances like concentrated liquidity and restaking - these innovations remain largely siloed, unable to work together efficiently.

The challenges present in several critical ways:

1. LP tokens, despite representing significant value, are rarely accepted as collateral due to their complex valuation and liquidation mechanics

2. Money market deposit tokens (like aTokens from Aave) often sit idle after deposit, representing a missed opportunity for additional composability

3. Liquid staking tokens and other yield-bearing assets lack proper infrastructure for leverage and hedging strategies

This fragmentation has created a scenario where billions in DeFi assets are essentially single-purpose, unable to be used efficiently across multiple strategies simultaneously. Previous innovations have solved specific problems - flash loans provided instant liquidity, automated yield strategies simplified farming, concentrated liquidity improved capital efficiency in AMMs - but none have addressed the core issue of making these innovations work together seamlessly.

The next evolution in DeFi capital efficiency requires more than just another isolated innovation. It demands a unifying layer that can make these existing innovations composable, allowing users to maximize the utility of every asset while maintaining the benefits of each protocol's unique features. This means creating new mechanisms that can unlock the full potential of previously underutilized assets, transforming idle capital into productive strategies.

The DeFi ecosystem on Ethereum currently holds over $34+ billion in assets across lending markets, DEXes, and yield protocols that remain underutilized from a capital efficiency perspective. While these assets generate yield through various mechanisms - LP fees, farming rewards, staking returns - they represent a massive pool of locked capital that could be further leveraged to enhance returns and create new opportunities.

This untapped market spans across various DeFi sectors on Ethereum:

• DEX Liquidity: $6.4B+ in LP tokens across major DEXes

• Lending & CDP markets: $23B+ in deposit tokens (aTokens, cTokens)

• Yield farming: $4.5B+ in staked assets (PT tokens, vault tokens)

DeFi's growth has been remarkable, but it's hiding an uncomfortable truth: over a third of all TVL reported on DefiLlama is essentially sitting idle. These aren't small numbers – we're talking about billions in assets that are locked up in protocols, generating yield but unable to be used productively elsewhere.

Even more striking is the concentration of these assets. 90% of DeFi's TVL sits in just the top 30 protocols. Think about that for a moment. Users are depositing their assets into established protocols like Aave or Curve, earning yield, but then those assets just... sit there. Your stETH is earning staking rewards, your LP tokens are accumulating fees, your aUSDC is accruing interest – but that's where the story ends.

The traditional finance world solved this problem decades ago. When you buy a house, you can use it as collateral for other investments. When you have stocks, you can margin trade against them. But in DeFi? Your assets are typically single-purpose, locked into one protocol at a time.

This is where (re)collateralization changes everything. Instead of forcing users to choose between different yield strategies, Tren enables true composability for idle liquidity. Your LP tokens can keep earning fees while being used as collateral. Your staked assets can maintain their staking rewards while enabling leverage. Your money market positions can generate their base yield while opening new opportunities.

When every DeFi asset can work in multiple ways at once, everybody wins. Users get more from their existing positions, protocols see increased engagement, and the whole ecosystem becomes more efficient. That's the power of (re)collateralization.

When we started building Tren Finance in late 2023, we had a clear vision: democratize lending in DeFi by accepting any crypto asset as collateral. From blue-chip assets like ETH to the latest memecoin sensation, we wanted to unlock liquidity for everything. And while this resonated with many in the community, we discovered something unexpected along the way – our technology was actually solving a much bigger problem than we initially realized.

The pivot moment came when we took a hard look at our infrastructure. We had spent months developing sophisticated systems to handle niche assets safely, but our real breakthrough wasn't in supporting memecoins – it was in how we could handle complex, locked assets. We had built a foundation perfect for (re)collateralizing the billions of dollars currently sitting idle in DeFi protocols.

Our journey taught us some valuable lessons. Starting as a lending protocol for volatile assets, we quickly learned that attracting lenders to these markets was an uphill battle. This led to our first major evolution: shifting to a CDP model where we could act as the sole lender. This change allowed us to focus on what really mattered, building a protocol that enhanced the entire DeFi ecosystem rather than competing with established players.

The reality we faced was clear: DeFi doesn't need another Aave or Compound competitor. What it needs is infrastructure to make existing assets work harder. Over a third of DeFi's TVL is locked in protocols, generating yield but unable to be used productively elsewhere. This realization was our true "Aha" moment – Tren Finance could be the bridge that unlocks this trapped liquidity.

This vision resonated with some of the sharpest minds in crypto. We successfully raised for our seed round, backed by notable investors including Contango Digital Assets, Maven Capital, Moonrock Capital, OIG, Spyre Capital, Metabros, and Ozaru Capital. We're incredibly grateful to these partners who not only believed in our initial vision but supported us through our evolution as we refined our product-market fit.

Security has been paramount in this evolution. We partnered with Omnisicia and Zokyo, two of the most respected audit firms in the DeFi space, to ensure our protocol's integrity. Their audits have helped us build a foundation our users can trust, while their feedback has been instrumental in refining our approach to risk management.

This transformation into a (re)collateralization protocol marks the beginning of an exciting new chapter for Tren Finance. We've made several key improvements to our protocol that we believe will revolutionize how users interact with their locked assets:

The rebranding to $XY better reflects the true nature of our protocol's synthetic dollar - a debt token backed by overcollateralized loans rather than a traditional reserve-backed stablecoin. This distinction is important as it clarifies $XY's role in the Tren ecosystem: a tool for efficient capital deployment rather than another stablecoin in an already saturated market.

$XY's positioning emphasizes its core function:

• A debt token enabling (re)collateralization strategies

• Protocol-native synthetic dollar for efficient capital deployment

• Primary mechanism for unlocking liquidity in existing DeFi positions

• Tool for executing complex cross-protocol strategies

One of our boldest decisions was removing redemptions entirely from our protocol. While redemptions are common in CDP protocols and can quickly restore a token's peg during volatility, we've seen them cause more harm than good across the DeFi landscape.

Here's the hard truth we learned: rapid peg restoration through redemptions comes at a devastating cost to users. When protocols allow redemptions, they essentially create a PvP environment where users are forced to maintain unnecessarily high collateral ratios to avoid having their positions targeted. We've watched this pattern play out repeatedly, leading to reduced capital efficiency and, ultimately, user exodus.

Instead, we've implemented a buyback and burn program for $XY. Yes, this means peg recovery might take longer during stress events, but we believe protecting our users' positions is worth this trade-off. After all, what good is a perfectly pegged token if users don't trust the protocol enough to use it?

Our journey to redefine DeFi efficiency has led us to focus on three primary use cases that we believe represent the biggest opportunities for unlocking trapped value:

1. (re)Enable AMM Liquidity - AMM liquidity providers have long faced a frustrating choice: earn LP fees or use their tokens as collateral elsewhere. Through Tren, LP tokens from platforms like Uniswap, Curve, and Balancer can now do both. Users can maintain their LP positions while accessing leverage, hedging against impermanent loss, or even gaining additional BTC exposure – all without sacrificing their original yield.

2. (re)Collateralize Money Market Deposits - We've seen billions locked in money market protocols like Aave, Compound, and Morpho. These deposit tokens typically sit idle after earning their base yield. With Tren, users can now put these deposit tokens to work, accessing 0% interest stablecoin loans or implementing sophisticated delta-neutral strategies while keeping their original positions intact.

3. Leveraged (re)Staking - The rise of liquid staking and platforms like Pendle has created new opportunities for yield generation. Through Tren, users can amplify these positions through leverage, engage in BTCfi strategies, or capture interest rate arbitrage opportunities – all while maintaining their base staking rewards.

What makes these use cases powerful isn't just what they enable individually, but how they work together. Each represents a different way to unlock trapped liquidity, creating a more efficient DeFi ecosystem where assets can work harder without sacrificing their original utility.

This is what we mean by (re)collateralization – we're not here to compete for liquidity or create new money markets. We're here to help users squeeze every drop of value from their existing positions. Whether you're an LP provider looking to hedge risks, a money market depositor seeking additional leverage, or a staker wanting to amplify yields, Tren gives you the tools to maximize what you already have without sacrificing your core positions.

The ability to (re)collateralize existing DeFi positions requires technical infrastructure that can handle complex valuations, manage risk, and enable sophisticated strategies - all while maintaining security and capital efficiency. We have combined battle-tested DeFi primitives with our novel Proof-of-Liquidity mechanism to create a secure foundation for unlocking idle assets. Our technical stack leverages isolated modules for risk containment, integrates a flexible Hooks system for strategy execution, and introduces Proof-of-Liquidity for precise valuation of complex assets. Together, these features enable users to maximize the potential of their DeFi positions in ways previously not possible.

Our Proof-of-Liquidity mechanism represents a fundamental breakthrough in how DeFi protocols assess collateral value. Traditional price oracles provide spot prices but fail to account for the true liquidatable value of complex assets like LP tokens. Our system:

• Dynamically assesses the underlying liquidity of tokens

• Considers market depth and potential slippage during liquidation

• Provides real-time, accurate valuation of complex DeFi assets

• Enables safe liquidation parameters for traditionally difficult-to-value assets

This is particularly crucial for LP tokens, where accurate valuation has historically been a significant challenge due to impermanent loss and varying levels of underlying liquidity.

The Hooks system provides the foundation for advanced DeFi strategies through customizable smart contracts. These contracts enable:

• Auto-compounding through automatic yield harvesting and reinvestment

• Cross-protocol strategy execution

• Position management and rebalancing

• Risk mitigation through automated hedging

• Looping leverage through recursive borrowing engine

By allowing for customizable strategy execution, Hooks create new possibilities for capital efficiency that were previously impossible or required manual intervention.

The isolated module architecture is fundamental to Tren's ability to support diverse asset types while maintaining system security. Each asset type operates in its own independent market, preventing contagion risk and allowing for customized risk parameters. This approach enables:

• Asset-specific risk management

• Tailored liquidation parameters

• Systematic risk containment

• Customized hooks and strategies per asset

The DeFi landscape has evolved significantly since we started building, and so have user expectations. Points farming programs are losing their appeal as users grow tired of accumulating points without understanding their true value or conversion rates – and honestly, we get it.

That's why we're taking a different approach with our launch strategy. Instead of another points farming program, we're introducing our Liquidity Generation Event (LGE) through our Single Sided Liquidity (SSL) Program. Traditional liquidity provision is complex and costly, but our SSL Program changes that. Users can simply deposit USDT and receive double the liquidity exposure they would typically get from traditional LP positions. The best part? No confusing points or complicated reward systems. Participants are rewarded directly with locked TREN tokens, which will automatically unlock at the Token Generation Event.

What makes our SSL Program different? Participants don't need to worry about acquiring multiple tokens or executing complex transactions. One deposit is all it takes, and the program automatically pairs your stablecoins with $XY to create liquidity. This means $500 in stablecoins creates $1,000 in total liquidity – doubling your capital efficiency from day one.

Once our LGE concludes, we'll be moving to our mainnet launch. We've built something that will transform how users interact with their locked DeFi assets, and we're ready to share it with the world.

The groundwork is laid, the audits are complete, and our vision for unlocking DeFi's trapped liquidity is clearer than ever. Stay tuned for detailed information about our LGE program – we think you'll find it's worth the wait.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Tren Finance is building the solution: DeFi's first (re)enabling protocol that unlocks the full potential of previously underutilized assets through three core strategies:

• (re)Enable AMM liquidity - Let LP tokens keep earning fees while being used as collateral

• (re)Collateralize money market deposits - Put deposit tokens to work while maintaining base yield

• Leverage (re)staking positions - Amplify staking returns through strategic leverage

We're excited to announce the completion of our seed round, backed by leading crypto-native investors who share our vision: Contango Digital Assets, Maven Capital, Moonrock Capital, OIG Capital, Sypre Capital, Metabros and Ozaru Ventures.

"DeFi has evolved significantly over the past few years, but capital efficiency remains one of its biggest challenges. Most assets are still single-purpose, locked into one protocol at a time. Tren's (re)enabling protocol changes this fundamentally by allowing users to maximize the utility of their existing positions while maintaining their original yield" - Daryll Netscher, Founder of Tren Finance.

Since our inception, we've made significant progress in building and securing our protocol. We've successfully developed and deployed our testnet, which has undergone comprehensive security audits by leading firms Omniscia and Zokyo. Our protocol's potential has been recognized through our win at the Mode Yield Accelerator, and we've established strategic partnerships with key players including Mode Network, Ionic, and Sturdy Finance.

With our technical foundation secured, we're preparing to launch our Liquidity Generation Event (LGE) through our Single Sided Liquidity contract, while raising our VC round to accelerate growth.

We're building the foundation for a more efficient DeFi ecosystem where every asset can work harder. Stay tuned as we transform how users interact with their existing DeFi positions.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralize their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Sturdy Finance has established itself across 25 different money markets on four chains (Ethereum, Mode, Optimism, and Linea). Notably, it's the third-leading lending market on MODE by Total Value Locked.

Like Tren, Sturdy uses isolated pools, allowing each asset to have its own money market. This approach contains risk to individual modules, enabling the use of diverse collateral assets such as Yearn Curve pxETH/stETH and Pendle's rswETH.

Our partnership with Sturdy Finance is set to unlock an estimated $3.3 million in idle liquidity. Here's how it works:

1. Users supply assets to Sturdy's lending pools, earning yield on their deposits.

2. Sturdy issues receipt tokens representing these lending positions.

3. Users can then deposit these receipt tokens as collateral on Tren Finance.

4. Tren allows users to borrow trenUSD against this collateral.

5. Throughout this process, users continue to earn yield from their original lending position on Sturdy.

This approach allows users to maximize the utility of their assets, effectively putting their money to work twice.

This partnership will create new opportunities for users to maximize their DeFi strategies. By engaging with both protocols, users will be able to earn points from Sturdy's partners such as Optimism, Mode, Etherfi, and Renzo. More importantly, users will be able to deposit their Sturdy receipt tokens as collateral on Tren Finance to borrow trenUSD. This trenUSD can then be used for additional farming opportunities, effectively amplifying the potential returns from the initial deposit.

For those looking to get involved with Sturdy Finance, they are currently participating in the Optimism SuperFest. This event provides enhanced farming opportunities on their platform. While our partnership features aren't live yet, this event offers a great chance to familiarize yourself with Sturdy's ecosystem in preparation for our future integration.

As part of our collaboration, we're working closely with the Sturdy team to list their receipt tokens as collateral on Tren Finance. Initially, we plan to support the following tokens:

Please be aware that this is not a guarantee. While we intend to list these tokens, technical or other constraints may prevent us from doing so.

We will release detailed information about risk parameters for these tokens in the near future.

To mark this partnership, we've distributed a limited number of invite codes for the Tren Finance testnet to the Sturdy team. Keep an eye on Sturdy's social media channels for a chance to get involved early and secure additional benefits for our mainnet launch.

As we move forward, both Tren Finance and Sturdy Finance remain committed to expanding DeFi possibilities. We believe that by combining Sturdy's multi-chain presence and isolated market structure with Tren's ability to unlock liquidity, we can create more efficient and user-friendly DeFi solutions.

Stay tuned for updates as we roll out new features stemming from this partnership. We're keen to see how our community leverages these new possibilities to enhance their DeFi strategies.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team is comprised of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, Venom Foundation and more, team Tren brings a wealth of knowledge to the table.

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Protocol vs Token

If you’ve been in DeFi for a while, you’ve probably seen good protocols with bad tokenomics, and bad protocols with good tokenomics, but very rarely examples of projects that are able to combine the two together. The “good protocol with bad tokenomics” is the most common trope. We don’t want to name any names, but there are a number of blue chip DeFi protocols with tokens that fit this description. These protocols are the pillars of DeFi, functionally amazing to use in nearly all aspects, and capture high TVL with strong revenue flows. You want to invest in the continued success of these protocols, only to find out that the only real utility of the native token is… governance.

Now, please don’t mistake us. We believe governance and decentralization are very important, which is why Tren Finance will incorporate a DAO. But sentiment has changed on protocol tokens where the sole, primary utility is governance. People want more than just governance tokens. Uniswap, which has been the main example used for “good protocol, bad tokenomics” seems to be aware of this changing sentiment. While a final decision on enabling revenue share for $UNI holders hasn’t been made yet as of this blog post, there’s no doubt that investors reacted positively to the news, with a 60% price increase for $UNI when the fee switch proposal gained popularity in February.

$GMX was one of the first DeFi value accrual tokens to gain popularity back in 2021. By staking $GMX, users can earn roughly 30% of revenue generated by the protocol, which currently equates to around 10% APR. By staking $GMX, users also gain governance power, but the revenue share aspect, together with the success of the protocol, was what made the token popular. Other perpetual futures DEXs like Gains Network also gained popularity with similar revenue sharing features.

With this success, new tokens began launching with built-in revenue sharing tokenomics. Telegram trading bots like Bananagun and Unibot offered revenue sharing for their token holders. One difference from $GMX was that users did not have to stake their tokens, and just needed to hold the project tokens to claim accrued revenue. Rollbit, a GambleFi platform that allows users to bet on sporting events, went in a new direction with revenue sharing. Instead of the typical revenue share model where token holders/stakers receive a percentage of revenue generated by the platform, the platform uses this revenue to buy back and burn the project’s $RLB token. $RLB token holders benefit as the buybacks put buying pressure on the token, and the burns decrease token supply.

The buyback and burn method of value accrual opts for token price performance instead of revenue share. CEX tokens like Binance’s $BNB have also historically used a token burn method, although most don’t buy back tokens and instead burn token supply that is not yet circulating. As the massive $CRV liquidations on multiple lending protocols in June have shown, a successful protocol by itself no longer guarantees token success. Recent events with $UNI and $CRV are clearly saying that the market values, and now expects appropriate value accrual mechanisms for protocol tokens.

These are all lessons that we took into account when designing $TREN. We want the $TREN token to succeed as much as we want the protocol to succeed, and it’s why 90% of protocol revenue will be used for $TREN buybacks. This means that the fees that the protocol collects will be used to buy back $TREN. For example, if someone wants to borrow XY using collateral Asset A, they will pay a one time borrowing fee. This is paid to the protocol in the form of collateral Asset A, which will then be used to buy back $TREN.

This $TREN is then shared amongst various stakeholders within the protocol, as part of the revenue allocation process. As shared in our previous blog on risk, we are always thinking about balancing risk vs reward, and the revenue allocation process is no different. In general, the protocol will prioritize safety first, which is why Stability Providers and XY liquidity providers may receive a higher percentage of protocol revenue to start. Once the Stability Pool and XY liquidity is deemed sufficient, a higher percentage of protocol revenue will flow towards stakeholders involving $TREN.

These stakeholders include $TREN liquidity providers, and veTREN holders. This is to ensure that $TREN has strong liquidity for users to trade, and so that veTREN holders are compensated fairly for locking up their $TREN. The longer that veTREN holders lock up their $TREN, the more rewards they receive, as explained here.

Simply holding $TREN also allows anyone to be a part of the value accrual process. We’re committed to making $TREN a long term deflationary asset, and we will be conducting ongoing token burns with surplus accrued revenue, including team revenue (e.g. LP fees that the team earns from providing liquidity to $TREN and $XY on DEXs). With the $TREN buybacks and burns, holders benefit from increased buying pressure on $TREN, and a deflationary supply.

Based primarily from our own experiences using DeFi protocols and investing in protocol tokens, we wanted to design $TREN so that it would reflect the current and potential future success of the protocol. Through this, we believe that we have designed an innovative value accrual token in $TREN.

90% of protocol revenue is used to buy back $TREN, and distributed to stakeholders who make Tren a stronger protocol. Just by holding $TREN, users benefit due to the ongoing $TREN buybacks and burns, leading to increased buying pressure, and a deflationary supply. Other protocol stakeholders, such as $TREN / XY liquidity providers, Stability providers, and veTREN holders also benefit from these buybacks and burns due to the increased buying pressure and decreasing supply of $TREN, plus they also receive $TREN rewards on top of these benefits through the revenue share process. Through these mechanisms, we believe that we have created flywheel tokenomics that will make everyone think “good protocol, good tokenomics” about Tren Finance.

Tren Finance is the first Liquidity (re)Enabling Protocol that brings capital efficiency to DeFi through composability. We allow users to (re)collateralise their LP tokens, money market deposits, and (re)staked positions, unlocking billions in idle liquidity across the ecosystem. Built by a team of DeFi veterans with experience from leading protocols like MakerDAO, Ajna, Binance and Venom, Tren is paving the way for a more efficient and interconnected DeFi ecosystem.

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Ionic Protocol has made waves by allowing the integration of any yield-bearing asset into its market. This isn't just a neat trick; it's a game-changer that amplifies the composability of the Mode Ecosystem and liberates liquidity from yield-bearing assets. If that sounds like music to your ears, you're not alone - it harmonizes perfectly with Tren Finance's mission to boost capital efficiency and utility across a diverse crypto asset landscape.

Ionic Protocol is the top lending market by TVL on Mode, with 110,000 users. Ion receipt token holders benefit from supply-side interest rates, Mode points, Turtle points, and Ionic points.

Through our partnership, users who hold Ionic receipt tokens as collateral on Tren will continue to receive these rewards while unlocking liquidity by borrowing trenUSD against their ion receipt tokens. This provides a significant use case for these tokens and welcomes Tren to a broad user base.

Ionic issues receipt tokens for those supplying tokens to their pools, offering yield in return. To maximize your assets, you can supply them for yield on Ionic, then use the receipt token as collateral on Tren Finance to take out a loan. This loan can be used to cover expenses, invest in the latest memecoin, or put to work on other protocols, thus maximizing your yield.

As part of our partnership with Ionic, we plan to accept the following receipt tokens as collateral on Tren Finance:

Please be aware that this is not a guarantee. While we intend to list these tokens, technical or other constraints may prevent us from doing so.

We will release detailed information about risk parameters for these tokens in the near future.

• Supply Assets on Ionic: Users can supply one of the assets listed above on Ionic.

• Receive Receipt Tokens: Once the position is confirmed, users receive a receipt token representing their lending position.

• Loan on Tren: Users can bring their receipt tokens to Tren, find the corresponding module, and use the tokens as collateral to take out a loan in trenUSD.

• Enjoy liquidity: use your liquid trenUSD across DeFi to get the most out of your strategy.

The partnership between Tren and Ionic creates a more interconnected and efficient ecosystem that benefits all participants.

This collaboration allows users to maximize the utility of their assets in ways previously unavailable. By using Ionic receipt tokens as collateral on Tren, you can simultaneously earn rewards and access liquidity - a powerful combination that enhances capital efficiency and opens up new strategic possibilities.

In summary, you get:

1. Continuous Rewards: Keep earning yields from Ionic while your assets work for you on Tren.

2. Enhanced Liquidity: Access the value of your yield-bearing assets without sacrificing their earning potential.

3. Increased Flexibility: Use your borrowed trenUSD for various purposes, from covering expenses to exploring new investment opportunities.

4. Ecosystem Growth: As more users engage with both protocols, we anticipate increased liquidity and stability across the Mode ecosystem.

We're particularly excited about the potential for innovative strategies this partnership enables.

To celebrate this new chapter, we've arranged for a limited number of testnet codes in collaboration with Ionic. For those eager to dive in early and secure a 2x points multiplier for the mainnet, keep a close eye on Ionic's social media channels.

As we move forward, we'll be releasing detailed information about risk parameters and additional features. This will equip you with the knowledge needed to make informed decisions and fully leverage the synergies between Tren Finance and Ionic Protocol.

In the world of DeFi, education and innovation go hand in hand. We're committed to providing you with the tools and knowledge to navigate this evolving landscape confidently. Stay tuned as we continue to push the boundaries of what's possible in DeFi.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team is comprised of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, Venom Foundation and more, team Tren brings a wealth of knowledge to the table.

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Early participation is a privilege that comes with benefits. Redeeming an invite code is your ticket to experiencing Tren’s features before they go live on the mainnet, but not only that, testnet users will also secure a 2x points multiplier once we transition to mainnet. This multiplier is irreplaceable and underscores our appreciation for early users. We want those who help us refine our platform and grow to be rewarded for their contributions, making their early involvement worthwhile.

Every user who redeems an invite code also receives 2 invite codes of their own to invite their friends.

Our referral program is unique. When user A invites user B using an invite code, both parties are better off. User B also gets a 2x multiplier, and user A gets 15% of User B’s points, which come from the extra points earned by User B. This allows us to reward referrals while preventing sybil attacks, as there’s no sense in inviting your own wallets since you’ll end up with the same amount of points. Ultimately, this design changes the dynamic from asking the person you’re referring for a favor, to doing them a favor.

At the launch of our testnet, users can borrow trenUSD against deposited testnet collateral. This feature lets you experience how our loans operate, including the process of securing and repaying trenUSD. It's a fundamental aspect of our platform, and we encourage everyone to give it a try, explore the mechanics, and provide feedback on their experience.

Another critical activity available during the testnet phase is staking trenUSD to the Stability Pool. While this feature primarily serves educational and testing purposes on testnet, it offers a glimpse into how it will function on the mainnet, including earning yields and contributing to the protocol’s security.

As we progress and get closer to mainnet, you will start to see additional features added to the protocol.

Navigating new platforms can be time consuming, but we've got you covered. Our documentation is your go-to resource for understanding the full spectrum of Tren’s functionalities. Whether you're looking understand the protocol better, or need step-by-step guidance on how to complete tasks, it’s all in the docs. If you need further help, reach out on Discord.

There are several ways to get an invite code:

1. Connections: You may know someone who has received an invite code, even if you are unaware of it. Ask around, they can provide you with access. If you don’t know anyone, try posting on X, maybe you’ll get lucky

2. Scan socials: Keep an eye on social media platforms like Twitter and Discord, where invite codes may be shared sporadically by KOLs and other testnet users. Every invite code comes with additional invite codes to give out.

3. Raffles: Participate in our regular raffles for a chance to win an invite code. To make sure you stay up to date on these, follow us on X and join our Discord and Telegram.

As we launch testnet, we hope you’ll connect with us by joining our Discord and following our social media channels. This way you’ll get the latest news and a direct line of communication with team Tren.

For those who already have an invite code, you can get started here: https://testnet.tren.finance/

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team is comprised of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, Venom Foundation and more, team Tren brings a wealth of knowledge to the table.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

In order to better comprehend the protocol, there are a few concepts to first understand. The first concept is overcollateralization. In order to borrow trenUSD, the loan position must always be overcollateralized. This means that the value of the collateral asset that is being used for the loan must always be worth more than the value of the trenUSD being borrowed. This is a key factor in the safety of the protocol. Because loans are always overcollateralized, Tren Finance is able to list riskier long-tail assets, and trenUSD is able to maintain its peg. Now, savvy DeFi users will already know that overcollateralization by itself will still expose the protocol to high levels of risk - “what if the long-tail asset isn’t able to be liquidated properly? What about the subsequent bad debt and its effect on trenUSD peg?” We will be answering those questions throughout this blog.

Another concept to understand is isolated modules. This means that each collateral asset will have separate markets and custom risk parameters. As an example, let’s say that there is an isolated module for ETH, and an isolated module for long-tail asset A. Because ETH is a safer asset, the module will have a higher max Loan-to-Value (LTV) ratio, and a higher liquidation threshold. Long-tail asset A will have lower risk parameters due to its higher risk profile. Now let’s say that long-tail asset A flash crashes without recovery and without a profitable liquidation, leaving the protocol in debt. The bad debt would only apply to the trenUSD allocated to long-tail asset A’s isolated module, and would not have cascading effects on other modules.

The example of long-tail asset A flash crashing is not something that we expect will happen often (although the protocol does account for such instances). The goal of the asset listing process is to avoid listing such risky assets, while at the same time listing innovative assets that users will want to use as collateral on Tren Finance. It’s easier to think of this process as a sliding scale. There’s the risk-averse side on one end. Being too risk averse, however, will just lead the protocol to list only a small number of blue chip assets. Then there’s the risk tolerant side, with too much risk tolerance leading to too many instances of the long-tail asset A example above.

When conducting a risk evaluation of an asset, a few key factors are taken into consideration. These factors include the market cap of an asset, number of holders, and total liquidity (more details in our Asset Risk Methodology docs page). A technical security risk evaluation is also conducted, along with oracle, and centralisation risk reviews. These evaluations are then used to assist in determining the risk parameters of an asset, along with the trenUSD allocation for an asset’s isolated module.

While much of the risk review process relies on empirical data points, we maintain a flexible approach when evaluating assets and setting risk parameters. For example, we would not evaluate an LP token in the same way as any other spot asset. Employing a rigid one-size-fits-all approach to asset risk would make it impossible for Tren Finance to list long-tail assets and different asset types such as receipt tokens, vault tokens, etc.

So what happens when a collateral asset on Tren Finance slips through the cracks of the asset risk evaluation process, and goes through a black swan flash crash liquidation event? The protocol will initially start with a v1 liquidation model using the Stability Pool, and evolve into a v2 liquidation model to handle such situations.

First, let’s take a look at the Stability Pool model. In this model, users stake their trenUSD into the Stability Pool to become Stability Providers. This entitles users to collect yield that is generated from discounted assets in loan positions that have passed the liquidation threshold. For example, a collateral asset such as ETH with a liquidation threshold of 90% would result in roughly a 10% gain for the Stability Pool because the ETH would be swapped for the trenUSD in the Stability Pool at a 10% discount. A riskier asset with a 65% liquidation threshold would result in roughly a 35% gain. Over time, Stability Providers lose a pro-rata share of their staked TrenUSD, while gaining a pro-rata share of the liquidated collateral assets at a discount. In the event of a flash crash, there is a risk that the value of the collateral asset becomes lower than the amount of trenUSD used to liquidate the position due to further price decline. This is only expected to be a rare occurrence however, with most liquidations ending in profit for the Stability Pool and Stability Providers. To read more about how the Stability Pool works, please read our v1 liquidations docs page. What happens in a last case doomsday scenario of the Stability Pool becoming empty? We’ve designed a Redistribution mechanism, which you can read more about in our docs page here.

The v2 liquidation model will make a few significant changes as to how liquidations are executed on the protocol. The main change is that the Stability Pool will no longer directly handle liquidations, and external liquidators will play a more significant role in the liquidation process. In v2, the Stability Pool will become the Backstop Pool, which acts as a backstop mechanism to cover bad debt in the event that a position cannot be liquidated. In return for taking this risk by staking trenUSD to the backstop pool, users earn yield by receiving a portion of the profits generated by external liquidators, and Tren Finance’s own liquidation bot. There are a few major benefits of this upgraded model. First, the trenUSD in the backstop pool is not used in the liquidation process, ensuring that stakers do not lose their deposits during a liquidation unless a shortfall event occurs. As external and internal liquidators now liquidate collateral, the risk of unprofitable liquidations for trenUSD stakers is significantly reduced. TREN is also introduced as the uniform reward token so that backstop providers no longer need to manage multiple tokens. These changes are designed to address the challenges of scaling the protocol to include a diverse range of long-tail assets. To read more about how v2 liquidations will work, please check our docs page here.

Maintaining trenUSD peg is dependent on a number of factors, much of which has already been discussed throughout this blog. One important factor is the risk and reward ratio for trenUSD stakers (Stability / Backstop providers). If unprofitable liquidations occur too frequently, the risk is too high, and trenUSD is no longer a desirable asset. In order for unprofitable liquidations to not occur frequently, the liquidation models above must be correctly designed with aligning economic incentives. Collateral assets must also be chosen carefully with the right balance of risk aversion vs risk tolerance, and with appropriate risk parameters. The points we have discussed throughout this blog are all essentially intertwined to some degree, and work together in creating a safe protocol.

Sometimes, particularly in raging bull markets, even high rewards (yields) are not enough and a large number of users could decide to sell their trenUSD, as we’ve seen with other synthetic dollar tokens. There are soft peg and hard peg mechanisms in place for when trenUSD is trading at above and below $1 USD. As a soft peg mechanism for when trenUSD is trading at above $1, users can initiate loan positions and sell the borrowed trenUSD to allocate funds elsewhere, which can contribute to a decrease in the price of trenUSD. When trenUSD is below $1, users can purchase trenUSD at this discounted rate to reduce their debt, which can drive up the price of trenUSD.

As a hard peg mechanism for when trenUSD is trading at above target peg, the protocol will mint additional trenUSD to sell for stablecoins. These stablecoins, along with the newly minted trenUSD, are then used to bolster trenUSD liquidity pools. When trenUSD is trading at below target peg, the protocol uses a redemption mechanism. Anyone can initiate a redemption, where for each dollar of trenUSD redeemed, the equivalent dollar value of collateral is transferred to the redeemer’s wallet. The protocol will treat 1 trenUSD as equivalent to $1 USD, even when trenUSD is trading at below $1 USD. This process acts as a hard peg by allowing redeemers to make a profit by restoring trenUSD to its target peg. However, not all user positions are eligible to be redeemed against. For each asset, Tren Finance will have a 0% interest module, and an interest bearing module. The 0% interest module allows for 0% interest rate loans, as the name suggests, but loan positions in these modules are eligible to be redeemed against. In exchange for 0% interest loans, users expose themselves to redemption risk. With interest bearing modules, users pay an interest rate, but their positions are not eligible to be redeemed against. This system design provides users the flexibility to choose between redemption risk vs cost.

For a DeFi protocol that is as sophisticated as Tren Finance is, risk is something that is intertwined with nearly all parts of the protocol. From the protocol level design selection to use isolated modules, to how asset listings are chosen, liquidation mechanisms, and how trenUSD maintains its peg, there’s a delicate balance between managing risk and reward. With this, we hope to offer users a diverse array of functionalities and options on Tren Finance suited for different levels of risk appetite.

If you’ve made it this far, congrats! You now have a great understanding of how risk is accounted for in Tren Finance, and how risk factors into collateralized debt position (CDP) protocols in general. To learn more about Tren Finance, please visit our website and follow our social media accounts linked below for continued updates.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

Building a DeFi protocol in 2024 involves navigating a complex set of challenges. Launching a great DeFi protocol does not just require innovative technology but also insights into market behavior, user needs and potential risks. Lets take a look at some of the aspects that make building a reliable protocol both challenging and rewarding:

The DeFi ecosystem lives on Ethereum. However, as most people know, high gas fees are a real buzz kill when it comes to user experience and profitability.

Layer 2 solutions are crucial for reducing high gas costs. Low-cost transactions are particularly beneficial for complex features, like asset leveraging, which often involve gas-intensive transactions. This is especially important for Tren since the ability to process transactions that involve advanced smart contracts quickly and affordably is crucial to user satisfaction and the utility of the protocol.

The crypto industry as a whole is rapidly reaching new levels of competitiveness, with new projects launching daily. We all have 24 hours in a day, and thus are operating on limited resources when it comes to time and attention. Getting people to find out about your project, use the product, and then talk about it is an increasingly growing mountain of a challenge.

Liquidity ensures that users can easily buy, sell, or trade $trenUSD and $TREN without significantly impacting its price. A robust liquidity pool enhances user experience, facilitates efficient price discovery, reduces volatility, and enables users to enter and exit positions quickly. Liquidity will also help substantially in establishing Tren as a household DeFi protocol. Moreover, liquidity attracts traders, investors, and developers, further contributing to the protocol's security and growth.

Making Tren secure is something we don’t take lightly. Our first line of defense is securing top-tier developers with a wealth of experience. Security audits are also vital for identifying and mitigating vulnerabilities, ideally from multiple auditors. Hiring experienced developers and doing multiple security audits with top auditing companies, simply put, is very costly but it's a price we're more than ready to pay.

As Tren gears up for mainnet launch, we are happy to have Mode Network as an ally. This collaboration will enhance our capabilities, streamline our operations, and expand our reach within the DeFi ecosystem. Mode's support and innovative solutions provides Tren with the tools and resources necessary to navigate the challenges of launching and scaling a cutting-edge DeFi protocol.

Mode Network offers a significant reduction in gas fees, up to 95% less that those on Ethereum as they are using Optimism’s Bedrock upgrade. Bedrock introduces a modular architecture that divides the operational stack into 3 components: Consensus, Execution and Settlement. This structure helps to simplify the transaction process while also enhancing overall network efficiency.

By optimizing these components, Mode achieves remarkable performance improvements in transaction costs, throughput, and sync speeds. For example, Mode features an average block time of just 2.0 seconds, compared to Ethereum’s 12 seconds, making transactions faster and more cost-effective.

Despite only having spent a few months on mainnet, Mode has acquired over 540,000+ on-chain wallets. They’ve made a splash on X with over 290,000 followers, and the word has been spreading around town. Planned co-marketing activities together with Mode will allow Tren to fast track the building of our own community of interested project followers and enthusiastic protocol users.

The Yield Accelerator also gives Tren access to funding and grants, allowing us to pad our marketing budget for exciting initiatives, as well as direct incentives to pass onto early users.

Furthermore Tren benefits from a share of sequencer fees through Mode's "Fee Sharing Contract." This arrangement helps to offset costs and directly incentivizes the creation of high-frequency, high-volume applications, enhancing our ability to develop and sustain an active user base. Enhanced by incentives such as Devdrops, these mechanisms collectively support our strategy to boost community involvement and platform growth.

By aligning with Mode’s initiatives that focus on users and developers, Tren can effectively reinvest these rewards back into the community, aiding in user acquisition and boosting our overall community growth.

By taking part in the Yield Accelerator Program, Tren is able to improve liquidity substantially. With Mode providing up to $10 million in funding for the projects that are apart of the program, Mode helps inject substantial financial resources that we can utilize to bolster the liquidity of our token pools.

Our partnership with Mode also allows us to introduce unique community incentive programs. These initiatives are designed to reward users for contributing liquidity beyond the standard trading fees generated from liquidity pools. By offering these extra incentives, we aim to deepen our liquidity pools and engage our community more actively, making liquidity provision a more attractive and rewarding endeavor. Stay tuned for more information on this.

Mode also assists in boosting the Tren security framework by providing essential resources and expertise. Among these we will be making use of the credits from Mode’s technology partners such as Goldsky, Pyth and Thirdweb, which supply tools and services that will enhance our operational and infrastructural capabilities.

Mode Network will also be providing us assistance in mitigating one of the most significant barriers for an emerging protocol, the high costs that are associated with security audits. By offering subsidised audits, Tren will be able to ensure that our smart contracts are secure and free from vulnerabilities, making sure that our user’s assets are safe on Tren.

In addition to the financial and technical support, Mode offers Yield Accelerator members a mentorship program where we look to gain invaluable insights from seasoned professionals across the industry, including mentors from: EigenLayer, Optimism, EtherFi, Renzo, Circle, Velodrome, Olympus, Pyth and more.

Joining the Mode ecosystem offers Tren significant advantages that extend beyond addressing our immediate challenges. Our integration facilitates engagement with other innovative projects, enhancing our exposure and opening doors for collaboration. Aside from what’s already been covered, Mode also offers:

• Direct Communication with Mode's Core Team: This allows us to resolve technical or strategic issues quickly, making sure we remain aligned with ecosystem developments and can leverage collective expertise effectively.

• Co-marketing Initiatives: Partnering on marketing efforts will significantly increase our visibility, helping us reach a broader audience and strengthen our brand presence.

• Strategic Partnerships: Engaging with other projects within the Mode ecosystem can lead to synergistic partnerships, enhancing our platform’s functionalities and expanding our reach.

Since launching in February, Mode has rapidly emerged as a leader in the Layer 2 space. With a TVL of $743 million, 550,000+ wallets, and more than 25 million transactions, they have positioned themselves as a prime hub for DeFi protocols. Mode's contributions to the ecosystem have been recognized by the Optimism Foundation, which awarded them a grant of 2 million OP tokens, valued at approximately $5.4 million today. This grant will support Mode's ongoing growth and its contributions to the Optimism Superchain.

As we integrate with an ecosystem of like-minded builders on Mode, we are excited about the synergies that lie ahead. For those eager to be a part of our journey, obtaining a testnet code is your ticket to become an early user. Users who secure an invite code will receive a 2x multiplier on all points once we transition to mainnet.

Tren Finance will officially launch mainnet on Mode after the testnet phase concludes. Stay connected by following Tren’s social media channels to receive the latest updates and information about our launch and ongoing developments.

We look forward to welcoming you to Tren Finance.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

This article will explain the concept and mention how Tren Finance implements TWAMM.

To understand what TWAMM is and its method of executing trades, we need to look at it precursors in both traditional finance and decentralized finance.

TWAP is the average price of an asset over a specified time. It is the traditional finance or off-chain equivalent of TWAMM and it is considered the most basic type of algorithmic trade.

A TWAP strategy is used to execute trades on large transactions in a way to minimizes the impact of the large order on the market in terms of price improvement. This strategy is employed to ensure that the trades contribute to maintaining the market price in proximity to its actual value. In essence, TWAP orders involve the systematic execution of trades throughout a predetermined period. For example, a TWAP order to buy $50 million dollars worth of stock over 6 hours would be executed at a price close to the time-weighted average price of that particular stock over that period.

TWAP orders are usually carried out by brokers who have the infrastructure to minimize or eliminate the operational difficulty of many small trades. They also have a direct connection to the market and pay a reduced transaction fee.

An AMM is a smart contract protocol that enables decentralized exchanges to carry out non-custodial and autonomous trading. It is the onchain precursor of TWAMM and was made popular by the likes of Uniswap and Curve. Before the advent of AMMs, centralized exchange platforms, also referred to as market makers used a classical order book mechanism to match trading orders correctly. An order book consists of different offers from buyers and sellers for an asset. It lists the quantities and prices that traders are willing to buy and sell for and gives users asset price information.

Unfortunately, they suffer from liquidity issues, which is when a seller cannot be successfully matched with a buyer — usually due to price differences. When liquidity is low there is a risk of slippage. Therefore, there is a need to conduct transactions instantaneously to reduce slippage risk.

An AMM replaces the conventional matching system and order books with an automated liquidity pool which is controlled by the constant product formula. This allows anyone to provide liquidity. In return, liquidity providers will receive minted derivative tokens that represent the number of tokens contributed and can be used to redeem their supplied assets. They are also given a percentage fee that matches their stake in the liquidity pool.

For any exchange operation, two liquidity pools are needed. To make sure the ratio of the assets in the liquidity pools remains as balanced as possible to eliminate discrepancies in the pricing of pooled assets, the constant product formula comes into play:

X * Y = k

X = the quantity of token A in the liquidity pool

Y = the quantity of token B in the liquidity pool

K = constant

Executing large orders on AMM is expensive and requires manual order splitting where the orders are split into several smaller ones (and usually sent to several AMMs). However, these smaller orders are usually still large to an extent and can be affected by limited liquidity on the AMMs or impaired by price impact. Price impact is the difference between the current market price and the expected price of an asset, a correlation between an incoming order and the subsequent price change. It usually occurs when a trader is swapping a large volume of assets and it is a function of the trade size relative to the liquidity pool size and it is the reason why a solution like TWAMM is needed.

TWAMM resolves this dilemma by breaking large orders into many infinitely small ones to ensure perfectly smooth execution over time. Interestingly, using a special mathematical relationship with its embedded AMM, it can drastically reduce gas costs across these small orders. Also, since it processes trades at the start of each block, it is less susceptible to MEV attacks.

The primary goal of the TWAMM is to execute its long-term orders smoothly over time so that they are executed for close to the prevailing time-weighted average price. This is similar to the goal of TWAP. As the size of the trade is broken down into small ones, price movement on the AMM becomes intensely reduced and becomes less visible.

In most cases, MEV bots play a significant role in executing Market-to-Market arbitrage. These bots continually monitor liquidity pools for opportunities to capitalize on price discrepancies. This automated process helps in swiftly correcting any deviations from the desired price peg.

Existing lending and CDP protocols rely on interest rates to encourage users to borrow during periods of low rates and repay their loans when rates are high. However, this model faces challenges when applied to long-tail assets that inherently lack abundant liquidity. Dealing with the concern of collateral liquidation, it becomes impractical to raise interest rates during high utilization. To prevent unnecessary compounding of principal interest, we have implemented collateral-based interest, wherein the collateral deposited in Tren is liquidated every block.

The introduction of the TWAMM becomes important in this case. Previous attempts at selling parts of collateral, such as Curve’s LLAMMA soft liquidations, fall short, especially when dealing with the assets offered by Tren Finance. Instead, the approach adopted is to liquidate the collateral in every block. While attempting this on a regular AMM would expose the process to MEV attacks and incur considerable gas fees, the TWAMM enables gas-efficient liquidation with zero risk of MEV attacks, as orders are naturally placed at the forefront of the queue.

Benefits include assets directly contributing to the DAO treasury, enhancing the reserve factor, without waiting for the loan to be fully repaid. Furthermore, high interest rates set by liquidation-based interest models serve to protect against bad debt rather than exacerbating the issue.

Tren Finance, similar to Frax and MakerDAO, leverages the TWAMM to consistently repurchase the TREN token using fees generated in each pool and profits from the liquidation bot. By employing the TWAMM for the TREN token buyback, the platform mitigates the risk of MEV bots front-running the transaction. Additionally, this approach injects buying pressure into the TREN token every block through actual revenue.

While TWAP strategies have traditionally aimed at minimizing market impact, and AMMs revolutionized trading mechanisms with automated liquidity pools, TWAMM emerges as the optimal solution, seamlessly blending efficiency and cost-effectiveness. The implementation of TWAMM in Tren Finance is strategically employed in two critical aspects: Collateral-Based Interest and Buybacks. The collateral-based interest model leverages TWAMM to execute liquidations efficiently in every block, contributing to the DAO treasury and fortifying the reserve factor. Meanwhile, TWAMM facilitates buybacks for the TREN token, ensuring a consistent injection of buying pressure and mitigating the risk of MEV bots front-running transactions.

In essence, Tren Finance not only adopts the TWAMM concept but strategically integrates it into essential aspects of its protocol, demonstrating a forward-thinking approach to decentralized finance challenges. As Tren Finance continues to develop, the implementation of TWAMM by the platform will also be improved to enhance efficiency, reduce gas costs, and fortify the resilience of the ecosystem.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

DeFi is only as strong as its weakest link. Long-tail assets in DeFi — assets that, despite their potential risk, embody the sector’s innovative spirit need a secure and flexible platform that users can interact with. No permission required.

Long-tail assets within Tren Finance refer to a wide variety of cryptos that are not typically in the mainstream focus of the high volume trading pairs. These can include niche LP (liquidity provision) tokens, meme coins, LRTs (liquid restaking tokens), LSTs (liquid staking tokens), RWA’s (real-world assets), vault tokens, and other less common tokens that, despite their potential for high returns, often lack sufficient liquidity on popular DeFi platforms. Tren Finance aims to address this gap by providing a secure and efficient platform where these long-tail assets can be used as collateral to take out a stablecoin loan, thereby unlocking their liquidity and making them more accessible. Tren Finance thus opens up new opportunities for yield generation in assets previously considered too risky or volatile due to their limited liquidity. Long-tail assets become accessible via isolated pools — a concept we’ve thoroughly examined in a recent article, which delves into the nuances of who, what, where, when, and why these pools are crucial for the ecosystem.

So in short, Tren Finance aspires to be the go-to platform for securely and efficiently unlocking liquidity for long-tail assets. Launching on Ethereum, despite expected high gas fees, aligns with our prioritization of security and stability, acknowledging the baselayer’s proven foundation amidst a crowded L2 and rollup space. Our seasoned team, deeply integrated into DeFi’s evolving narratives, is committed to outmaneuvering established platforms by leveraging our technological edge and cultivating a vibrant, liquidity-rich community. Said differently, we’re building a “safe space” for sophisticated degens. A community of cultured traders who see the value in capital efficiency as a net benefit to the market as a whole.

Nevertheless, Tren Finance is committed to broadening its horizons beyond Ethereum to include various Layer 2 solutions and rollups. This inevitable expansion is designed to cater to the platform’s growth and the increasing influx of users, ensuring scalability, reduced transaction costs, and enhanced performance. By integrating with these advanced technologies, Tren Finance aims to provide a seamless and efficient DeFi experience, making it accessible to a wider audience while maintaining the security and integrity of the platform. Stay tuned for upcoming announcements pertaining to the TrenDAO — governed by TREN, which will weigh in on future integrations.

At launch, the Tren Finance platform will offer services aimed at addressing gaps in the DeFi market. These include a unified platform where users can: Borrow trenUSD using a broad array of assets for leveraged staking and farming or for simply diversifying their holdings with increased exposure. Each isolated pool is tailored to meet the demands of the asset at hand with customizable interest rates, oracles, liquidation mechanisms and harvesting mechanisms. Our implementation of the TWAMM (Time Weighted Average Market Maker) allows for the first collateral based interest system in DeFi along with the benefit of efficient order execution. Note that not all aforementioned services will be available at launch.

• A wide range of assets available to borrow trenUSD

• Leveraged staking, restaking, and farming to increase yields

• Isolated lending markets for secure implementation of diverse assets

• Governance participation through the TREN token

• Algorithmic stablecoin (trenUSD) pegged to the USD backed by overcollateralized loans

• Liquidation opportunities for users to profit from bad debt

• Integration with TWAMM for collateral based interest

• Flexible oracle system for secure price data

These are many features which are designed to unlock liquidity in long-tail assets, enhance yield generation, and increase the capital efficiency of an underserved area of DeFi. While not every feature of Tren Finance may be utilized by each user, the platform ensures that all services work together securely, thanks to robust design principles refined through past protocol experiences. This knowledge informs our approach to setting protocol parameters that prevent adverse outcomes. However, it’s crucial for users to actively manage their risk and safeguard their private keys. The empowerment offered by Tren Finance comes with the responsibility to use it wisely, echoing the principle that with great power comes great responsibility. To learn more, we encourage users to familiarize themselves with our documentation, which we are continuing to update.

As more liquidity emerges from long-tail assets, such as meme coins, on a secure platform like Tren Finance, it can have a transformative effect on the DeFi ecosystem. Firstly, it democratizes finance by giving lesser-known assets a feature-rich platform, thus broadening participation and investment opportunities. This inclusivity can increase the total value locked (TVL) in DeFi, as more assets become available for lending, borrowing, and trading. Secondly, it enhances market efficiency and price discovery for these assets, as increased liquidity tends to reduce volatility. Ultimately, it fosters DeFi innovation by equipping developers and startups with the means to secure early liquidity through isolated pools, helping communities thrive during the early stages of price discovery.

trenUSD, an over-collateralized stablecoin, serves as the cornerstone for liquidity within the Tren Finance Ecosystem, enabling users to trust its value through transparent collateral backing visible on block explorers. Its stability is ensured through overcollateralized loans, and dependable game-theory maintaining a soft peg to ~$1. This approach establishes trenUSD as a dependable and resilient stablecoin, aptly named “Tren” in homage to its robust and bullish nature, mirroring the strength and growth potential it aims to bring to the DeFi space. We encourage everyone to familiarise themselves with our documentation on trenUSD. The section on differentiating between total supply versus circulating supply is vital to know, and makes for a great quiz question for upcoming campaigns!

Given that protocol design is dependent on assumptions about the future, TrenUSD acts as a soft peg and does not provide assurances for price stability.

Tren Finance will kick off with a community-first strategy, prioritizing user engagement and feedback in the development process. This approach ensures that our innovations are not only technologically advanced but also deeply aligned with the needs and aspirations of our community. By fostering an inclusive and responsive environment, we aim to cultivate a platform that resonates with users and empowers them to shape the future of DeFi. We strive to be memeing alongside all of our users in Discord in real-time as volatility enters the market on a day-to-day basis. We will soon announce our official discord server. We’re looking forward to meeting and incentivizing our most active participants.

It should go without saying, but it doesn’t. So; This is not financial advice. Navigating the volatile DeFi market requires a proactive approach to risk management. Tren Finance emphasizes the importance of understanding leverage, the volatility of crypto assets, and the secure management of private keys. We simply provide tools and front-end services to our users, encouraging them to make informed decisions that align with their risk tolerance and investment goals.

So, as we prepare to launch Tren Finance, we hope that our mission and the narrative behind what we’re building is more clear. We’re infused with a vision that extends far beyond today’s DeFi landscape. We acknowledge the audacity of our promises, understanding that trust and credibility are treasures earned over time. We invite the DeFi community to join us on a journey fueled by a belief in our experienced team’s ability to deliver a secure, user-centric product. Unlocking liquidity for long-tail assets is not just about strengthening the DeFi’s weakest links — it’s about paving the way for mass adoption. A secure and dependable DeFi platform that lives up to its promises has the power to bridge the gap between traditional finance and Web3, dismantling hesitations and igniting a global shift towards an inclusive financial ecosystem. With your memes and our dedication, there are no bounds to the heights we can achieve as a community.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

In existing lending/CDP protocols like AAVE and MakerDAO, assets share a common lending pool, and the risks of one asset impact all of the others, hence why they are unsuitable for listing long tail assets.

Isolated pools take a different approach by creating an individual pool for each of the supported tokens. Protocols like Kashi made by Sushi and Midas Capital introduced isolated lending pools, allowing anyone to create a lending pool as if it is a pool on an AMM.

While it sounded promising, a challenge emerged as these protocols required users to supply both assets in the pool, limiting participation for niche assets due to insufficient counterparty assets.

Upon identifying this issue, Tren Finance entered the stage with a novel approach — create isolated lending pools and introduce trenUSD to provide capital to each pool, ensuring borrowers have access to the liquidity they need. With this, there is a lending market for every asset and borrowers can seamlessly access the capital they require, overcoming the supply constraints that previously marred existing protocols.

In this article, we’ll dive into the intricacies that make Tren Finance’s Isolated pools a paradigm shift in the DeFi space.

At the heart of Tren Finance’s Isolated Lending is trenUSD, a stablecoin meticulously designed for protocol control. Unlike traditional stablecoins, trenUSD is more than a pegged value; it serves as the token bridging long tail collateral assets to any other token on chain. Also, unlike traditional stablecoins it is fully backed on chain by overcollateralized loans ensuring that the total value locked in smart contracts on Tren will always be greater than the value of the circulating supply of trenUSD.

Tren Finance offers users unparalleled flexibility by enabling over 100 different assets as collateral. This diverse range spans cryptocurrencies, to tokens representing tangible assets, LST and LSDs, providing users with an extensive array of options to secure loans. Users are no longer limited to a handful of options as seen in existing protocols, providing them with unprecedented flexibility in managing their collateral.

Assets deposited by users are never lent out to other borrowers and thus depositors are protected from various risks.

A typical example of this risk is governance attack where tokens with voting power are borrowed and used to maliciously vote on proposals that may not be preferred by the broader community. This feature help to mitigate individuals with sinister motives from accumulating a large percentage of the tokens that can be used to vote on malicious proposals.

Another example of such risk is cascading liquidations. When assets are borrowable, users can create short position with them, creating a significant price impact that may result in the loss of users’ funds due to liquidation penalties. With protected deposits users are not able to short asset thus preventing them from being exposed to risks.

Each isolated pool is a modular lending market that can be customized to fit the requirements of securely integrating the collateral token at hand. Each module serves a specific function, and the modules can be combined or replaced with others, offering flexibility, scalability, and a bespoke approach to integrating any collateral token. Anything from the liquidation mechanisms to yield generating functions can be customized and changed through governance.

Tren Finance’s Isolated Lending model not only addresses current market needs but also lays the groundwork for the future of decentralized finance. As the platform continues to evolve, users can anticipate the addition of new assets, enhanced protocol features, and a continually expanding ecosystem. We aim to ensure users experience a new era of decentralized lending — one that prioritizes flexibility, security, and the limitless potential of DeFi, opening doors to new opportunities and financial empowerment.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog

I will start off by discussing the narratives that I believe will contribute to the growth of DeFi in 2024. Bitcoin, followed by real-world assets, Uniswap v4, and liquid restaking.

It is well known that the volatility of Bitcoin has a significant impact on DeFi. Fluctuations in Bitcoin’s value can affect collateralization ratios, potentially leading to liquidations and loss of assets. This is because the value of the collateral used to secure loans in DeFi platforms is directly linked to the value of the underlying asset, such as Bitcoin.

Furthermore, the majority of large-cap tokens in DeFi are still strongly correlated to the price movements of Bitcoin. As a result, if the price of Bitcoin continues to rise, there is a high likelihood that these other assets will also increase in value. This, in turn, will lead to an increase in Total Value Locked (TVL) across all DeFi protocols, attracting more opportunities to the sector.

Next, we have Real World Assets (RWAs), which is a narrative that has not yet kicked off but is closely tied to the institutional adoption of crypto, led by the approval of the bitcoin ETF. The protocols that stand to benefit the most from the introduction of RWAs are DeFi protocols, such as money markets and stablecoins. The bullish case for RWA tokens is not that they will experience a 100x increase like a new shiny AI token, but rather that they will enable an influx of liquidity from traditional markets, such as the $100 trillion market share of equities, into decentralized finance. This influx of liquidity will contribute to a higher TVL in protocols that utilize these tokens and increased activity in DeFi. Additionally, the introduction of RWAs may allow tokens and protocols backed by RWAs to decrease their correlation with bitcoin.

I see Uniswap V4 as a catalyst for revitalizing DeFi. Uniswap has not undergone any major updates for over two years. While V3 introduced concentrated liquidity, which improved liquidity management for LPs, it also made the LP process more complex and impacted profits due to Maximal Extractable Value (MEV) in the Uniswap ecosystem. Uniswap V4 is the latest upgrade, focusing on flexibility. Instead of introducing a new liquidity management function, the team decided to let the community determine the future functionality of the AMM through programmable hooks. The standout feature of Uniswap V4 is the plan to internalize MEV profits, actively benefiting LPs and increasing demand for passive LP positions.

Finally, I have closely examined restaking within the EigenLayer protocol. Restaking allows users who have staked their ETH to actively contribute to extending cryptoeconomic security to various applications on the network.

In traditional staking, token holders can lock or “stake” their tokens to participate in the network’s consensus mechanism and receive rewards, typically in the form of additional tokens. However, this method imposes a significant constraint on users. Once the tokens are staked, they are locked for a certain period and cannot be traded or used in other activities. To address this limitation and leverage Ethereum’s permissionless innovation ecosystem, liquid restaking tokens (LSTs) are being created.

When you stake your tokens through a platform offering liquid staking, you receive another representative token in return. This token is a “liquid” version of your staked asset and represents your staked investment as well as the corresponding staking rewards. As a result, these tokens can be freely traded, used in decentralized finance (DeFi) dApps, or used as collateral in other blockchain-based activities.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, AJNA, Parity Technologies, Gamma, Parallel Finance, Binance, and more, we bring a wealth of knowledge to the table.

The basic idea behind CDP and lending protocols is to use your assets as collateral to obtain a loan that is overcollateralized. With this type of loan, you always lock in more funds in the smart contract than you borrow, ensuring that there is no bad debt.

While this concept is not new and protocols like AAVE and Compound have been implementing it since the DeFi summer, The difference with Tren Finance is that we focus on unlocking liquidity and leverage for tokens that are typically illiquid or niche. Instead of offering a few high demand assets like wBTC and ETH, we take an unconventional approach by building a protocol capable of securely offering a wide range of assets that would not typically be eligible as collateral in other protocols . The vision is that DeFi users will be able to use nearly every token they own in their non-custodial wallet as collateral for a loan or leverage position.

I will explain the benefits of being able to do this in relation to the tokens discussed previously. I will start with RWAs, then move on to LP tokens, and finally cover Liquid Restaking Tokens.

Projects are making progress by providing real-world assets, such as tokenized equities or fractional real estate. With effective execution, this allows holders of these on-chain assets to benefit from dividends for equities and rental payments for fractional real estate. But why stop there? The Tren Finance protocol enables users to deposit these tokens as collateral, allowing them to borrow trenUSD, an algorithmic stablecoin. This unlocks liquidity in their investments and provides instant access to a credit line that can be used to further invest in new opportunities within DeFi. Users can still benefit from holding their appreciating assets locked in the smart contract while also benefiting from the use of the RWA yield-bearing stablecoin.

The release of uni v4 will increase yield for passive liquidity providers (LPs) through internalized MEV profit, auto-compounding LP fees, and on-chain dollar-cost averaging with TWAMM implementations. However, why should it stop there? The Tren Finance protocol allows LP tokens to be used as collateral, similar to RWAs, enabling LPs to generate yield from providing liquidity while still accessing instant cash flow from trenUSD. This cash flow can be leveraged for yield farming activities, bringing back the yields LPs enjoyed during DeFi summer.

As mentioned before, the introduction of liquid restaking enables users to generate LRT tokens, serving as representations of ETH staked across diverse networks. Much like LP tokens, these tokens are tradable and come with inherent yields. However, the possibilities don’t end there. Imagine having your ETH staked across various networks, earning staking yields, and simultaneously enjoying the option to borrow stablecoins. To take it a step further, get up to 10x leverage on your LRTs through the Tren Finance Leverage feature.

We are excited to unveil a multitude of use cases for Tren Finance users in the upcoming months. Whether you’re interested in exploring leveraged restaking and farming opportunities, seeking an interest-bearing stablecoin backed by real-world assets, or considering using your meme tokens as collateral for a loan, Tren Finance is committed to making it all possible.

Our team is made up of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, Parity Technologies, Gamma, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

In the coming months, our focus is on refining the product and educating the industry. Early 2024 will witness the launch of the first version of our next-generation CDP protocol to the public.

We invite you to join us on this exciting journey, starting with our community page on X (twitter) and our Discord community.

Tren Finance is a CDP protocol designed to provide liquidity for various types of assets. Our team comprises of core contributors from various successful DeFi projects, boasting a combined TVL surpassing $1 billion. Drawing insights from our experiences at Venom, MakerDAO, Ajna, Parity Technologies, Parallel Finance, Casper Labs, and more, we bring a wealth of knowledge to the table.

We are excited to unveil numerous use cases for users interested in exploring leveraged staking, restaking and farming opportunities.

WebsiteㅣX (Twitter)ㅣTelegramㅣDiscordㅣBlog