We are thrilled to announce that Teller has partnered with Masa to launch web3’s first Soulbound Lending Pool.

Masa enables global users to create an authenticated on-chain identity: Masa Soulbound Identity. More than 200,000+ Masa Soulbound Identities have been minted across testnets since early August. Masa Soulbound Identity holders can connect their data attributes across web3 and web2 to generate their web3 credit report, and apply for a DeFi loan in the Soulbound Lending Pool powered by Teller.

Teller’s DeFi lending platform will connect Masa Soulbound Identity holders with lenders on-chain, match bids and asks, and facilitate lending transactions between borrowers and lenders. Overtime, users’ repayment history will be incorporated into their Masa Soulbound Identity, web3 credit report, and build their creditworthiness on-chain.

The Soulbound Lending Pool is a revolutionary way to open up access to capital based on a self-sovereign, portable, and on-chain identity. Our shared goal is to help billions of “credit invisible” people globally build their authentic soulbound identity on-chain, and leverage their on-chain identity to unlock access to capital and credit. Soulbound Lending breaks down the biases and barriers in traditional lending and gives global users an opportunity to gradually build their repayment history and creditworthiness on-chain.

Masa and Teller are working together to roll out the Soulbound Lending Pool shortly after the Masa Mainnet launch, offering utility for the hundreds and thousands of Masa Soulbound Identity holders. We believe this experiment, and Soulbound Lending, will represent a meaningful step in DeFi delivering real-world utility to the next billion users.

“We cannot let the recent events in the crypto cloud the reasons why we chose to build decentralized finance in the first place: DeFi for good. DeFi Lending has the opportunity to give billions of ‘credit invisible’ people globally access to on-chain credit. We want to use DeFi for good for the next billion users, and our Soulbound Lending Pool collaboration with Teller is the first step towards this direction,”

says Calanthia Mei, Co-founder at Masa.

“Soulbound tokens (SBTs) will become a fundamental identity layer of web3. Integration into DeFi, the most adopted use-case on Ethereum, SBTs will shape the emergence of identity based DeFi applications. The collaboration between Teller and Masa unlocks this new application layer for identity-based on-chain credit pools,”

says Ryan Berkun, CEO and Founder at Teller.

Are you interested in applying for a loan from the Soulbound Lending Pool?

Join the waitlist here.

Teller Partners with Masa Finance to Introduce Web3’s First Soulbound Lending Pool was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Supported by Teller Protocol, Polytrade is a decentralized lending protocol focusing on small and medium-sized enterprises (SMEs) in developing markets. For these SMEs across the world, Polytrade has opened the door to greater growth through financing through trade, or trade finance. Historically speaking, trade finance is among one of the more stable markets.

“This marks the first opportunity for lenders to extend credit via DeFi in the trade finance market,” Teller CEO and Founder Ryan Berkun said.

On Polytrade, lenders get 1 $TRADE token for every USDC lent per year in addition to the 6% USDC APR.

Old Markets, New Methods

Polytrade, enlisting the Polygon-built Teller Protocol, is meeting the capital needs of trade finance SMEs by integrating with larger liquidity pools. In the process, invoices are brought on-chain and tokenized via Teller and by Polytrade. These invoices are assigned for collection when due, on-chain.

“By utilizing Teller protocol, Polytrade is able to unlock an entirely new liquidity pool, offering a wider array of qualified lenders the chance to provide trade finance credit,” Polytrade Founder Piyush Gupta said. “This major development builds upon our mission at Polytrade to transform and amplify global trade for healthy economic growth.”

Within trade finance, invoice financing is when open invoices are backed by insurance from well-rated insurers, with liquidity being provided to exporters and short-term liquid assets to investors and/or lenders.

Taking on Trade

As a whole, trade finance represents a massive integration opportunity for DeFi. Polytrade is seeking to support and grow international trade with DeFi, through the collaboration of purchasers, suppliers, insurers, and investors.

Many intersections of the traditional CeFi markets and their new counterpart in DeFi have occurred after dedicated collaboration between Teller and Polygon; Polytrade is another innovative iteration.

“Polygon seeks to be the bedrock of the next stage in the Web’s evolution and in DeFi — and, by leveraging Teller, built on Polygon, Polytrade is bridging the gap between TradFi and DeFi, ” Head of DeFi and Labs at Polygon Hamzah Khan said. “We are grateful to be a part of bringing these financial opportunities to the trade finance market and excited for the innovation being built throughout DeFi.”

Be sure to keep up with Teller for more market debuts.

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Polytrade and Teller Unlock DeFi for Small and Medium-Sized Enterprises was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Real Estate: There’s No Place Like Home

Among the myriad of use cases that a DeFi lending protocol can solve, those in real estate have a serious potential to catalyze adoption. Home buying in crypto is still a frontier that is early in its exploration.

Teller recently welcomed a crypto-mortgage market complete with lending and borrowing opportunities with USDC.homes to the protocol.

In the spirit of continuing to expand yield opportunities to liquidity providers across DeFi, Tower Fund Capital, an SEC- Reg. “D” private lender for real estate investment loans with a $140 million debt fund, leverages the Teller Protocol with this new market.

“This marks one of the first opportunities for DeFi lenders to earn interest on real estate-secured loans — one of the safest and most trusted interest-bearing assets,” Teller Founder & CEO Ryan Berkun said.

For those unfamiliar, a real estate debt fund is made of private equity-backed capital that lends to potential purchasers or holders of real estate assets. These funds aid in connecting borrowers with quick capital for a wide range of commercial real estate projects. These projects can include multifamily buildings, shopping centers, construction loans, and more.

“By leveraging Teller’s digital asset lending and borrowing protocol, Tower Fund Capital is able to unlock an entirely new market for DeFi, offering lenders the chance to earn interest through one of the first-of-its-kind real estate-secured loan funds,” Tower Fund Principal Ed Gitlin said. “This major development builds upon our mission at Tower Fund Capital to be a one-stop service for funding within the real estate industry.”

Breaking New Ground

While real estate debt funds have not been available to DeFi investors, Teller and Tower Fund Capital have made history in making this asset class accessible on-chain.

With the new market on Teller from Tower Fund, lenders can provide their liquidity to earn monthly interest on a single-year term.

Start earning yield with real estate secured loans and keep a look out for more market debuts on Teller.

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Teller Protocol Expands to Housing-Backed Lending with Tower Fund Capital was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Destination: Lender-Backed Travel Protection

The journey to V2 continues as more focused markets are launching with the Teller protocol as their foundation.

CreditFi and Koala have partnered together to debut lender-powered travel protection with crypto on a global scale. In a time where traveler volume is more volatile than usual, users can benefit from APRs of at least 15% when providing their liquidity.

“We’re excited to help our partners unveil the first DeFi-native travel protection program and usher in this new era of lending and borrowing tied to travel,” said Teller Founder and CEO Ryan Berkun “CreditFi, in partnership with Koala, gives travelers peace of mind and a positive lender incentive, while offering DeFi services to an industry that has historically only been supported by traditional finance.”

It’s inspiring to see the manifestation of blockchain-based solutions solving new and current challenges.

Unexpected Stops

Over the course of the global pandemic, travelers and institutions alike have witnessed previously unseen changes in the number of travelers, health-related travel restrictions, and available professionals. Issues such as the sudden restriction of entry to a destination and spikes in operational and logistical performance we experienced across the airline, hotel, and tourism industries alike.

Last month in the United States, airlines canceled more than 3,500 domestic flights in a single weeked. In addition to this, experts believe that relief to the issues plaguing the travel industry will not arrive in time for the summer travel craze. Apparently it’s flight was delayed.

One particular result of these changes was the heightened popularity of products and services that offered travelers ways to preserve the initial cost of their trip, in the face of increased flight cancellations, missed transfers, and more.

CreditFi: Connecting Polygon, Koala, and Ensuro

Stepping up to combat this challenge, Koala provides assurance to travelers by allowing them to cancel trips for any reason, and retain the full ticket value for delayed or missed flights.

“When we founded Koala, we knew that shifting the travel protection landscape to a digital-first approach would both save users money and bring back confidence to travel,” said Ugo Weyl, Koala’s CEO & Co-Founder. “Bringing the first travel protection option to DeFi, using the Teller Protocol, is a monumental move in our digital-first service strategy.”

While there may be uncertainty in the travel landscape, it’s relieving to know that organizations like Koala are keeping users in mind.

CreditFi is powered by Teller and Polygon, and enlists Ensuro smart contracts. As lenders, users can contribute their capital to a USDC pool. Once staked, users can benefit from APRs of at least 15%.

As CreditFi is on the Polygon blockchain, users can avoid high gas fees and wait times while still preserving security and decentralization from the network.

“We are grateful to be a part of bringing DeFi to travel protection with Koala through providing Polygon’s blockchain framework to Ensuro and Teller,” said Polygon Head of DeFi and Labs Hamzah Khan. “This is yet another innovation that shows how services once previously found in traditional finance only are coming to DeFi.”

With liquidity pooling, Ensuro is working to become the first decentralized, fully licensed insurer.

“The product launched with Koala and CreditFi is a clear example of how Defi is permeating our everyday lives,” said Ensuro CEO Marco Mirabella. “Smart contracts automate and bring transparency to the processes, and produce more appealing and convenient products for the end-users.”

Take your seat. Lending in DeFi is preparing for takeoff.

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A First in DeFi: CreditFi and Koala Debut Travel Protection Lending on Teller was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

The guiding motivation behind the team building Teller is fueled by recognizing the nearly endless use cases where unsecured crypto lending replaces its archaic, fiat counterpart. Staking for yield and lending for NFTs are among the most common uses of liquidity in the space today, with the market dreaming to secure bigger, off-chain assets.

Now for homebuyers in Texas, and soon for those across the country, those dreams have come true.

A New Frontier in DeFi

USDC.homes is proud to provide borrowers with crypto mortgages, funded and repaid in USDC, and enable this monumental use case for the market. For lenders, USDC.homes opens new ways of investing crypto in real estate and is supported by TrueFi, a protocol for uncollateralized lending by Trust Token.

“TrueFi is proud to support the revolutionary USDC.homes with the launch of a bespoke portfolio, allowing any qualified lender to immediately invest in real estate on the blockchain,” TrustToken CEO Rafael Cosman said.

USDC.homes offers both unsecured and secured lending options, where ETH, BTC, USDC, and other popular coins have the option to be provided as collateral. Though all transactions related to the loan take place on-chain, borrowers can include off-chain data such as their credit score when applying. Prior to USDC.homes, a home buyer would need to liquidate crypto assets for conversion into fiat and expose themselves to the damages of taxation, fees, and a loss of position.

Evening the Playing Field

For the more than 33% of people in the United States who do not have the credit required for traditional mortgage programs, USDC.homes could be an option granted cryptocurrency collateral requirements are met. USDC.homes crypto-collateral mortgages are also advantageous to international buyers, who are often required to pay in all cash.

USDC.homes allows home buyers to borrow up to $5M, financing up to 80% with a 20% down payment in cryptocurrency. A borrower has already become the first to integrate with this exciting new iteration of an age-old process, taking out a $500k mortgage for a $680k home in Austin, Tx.

“We’re excited to help our partners unveil the first DeFi-native crypto mortgage in Texas and usher in this new era of mortgage lending and borrowing. USDC.Homes empowers potential home buyers to leverage their digital asset holdings to access a mortgage, opening up the doors for crypto-natives that have historically been locked out of the traditional mortgage lending process. This innovative mortgage loan market, built on the Teller protocol, integrates a mainstream user experience with the digital asset backend infrastructure of DeFi,” said Ryan Berkun, Teller’s Founder and CEO.

While crypto has been excluded from more traditional financial systems in the past, including appraisal for a mortgage, consumer demands paired with the growing value of crypto assets are forcing change.

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Welcome Home: USDC.homes Brings Crypto Mortgages to Texas Homebuyers was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

SG Loans, a Singapore-based decentralized and unsecured lending market built on the Teller protocol via Polygon and in partnership with Signum Capital, empowers users to obtain personal unsecured loans without the need of a bank or traditional loan provider. SG Loans is the first unsecured DeFi lending platform for Singaporean consumers, and unlocks opportunities previously exclusive to traditional finance.

The Current Crypto Scene in Singapore

In Singapore, one in every three consumers has accessed a personal loan in the past year. Funds are primarily used for daily living expenses, supporting family, and financing a mortgage.

The crypto space in Singapore has grown rapidly in recent times, with a total space investment value of $1.48 billion in 2021 in comparison to $110 million in 2020. According to Statista, a 2021 survey revealed that the average rate of crypto ownership in Singapore was 15.8%, surpassing the global ownership rate of 15.5%.

“We’re excited to help unveil a new DeFi-native credit market, based on the traditional credit ecosystem of today. SG Loans empowers consumers in Singapore to leverage both traditional credit history and digital asset holdings to access a personal loan. This innovative consumer loan market, built on the Teller protocol, unifies a mainstream user experience with the digital asset backend infrastructure of DeFi.” said Ryan Berkun, Teller’s Founder and CEO.

Opening the Books

SG Loans will function similarly to the existing Teller Protocol that fosters the creation of unsecured lending markets for crypto servicing lenders and borrowers alike.

“The Teller protocol is an excellent demonstration of how TradFi data can be used to enhance the zero or under collateralized lending on-chain. DeFi users can now borrow based on their credit rating from the Singapore Credit Bureau,” said YY Lai, Partner of Signum Capital. “The Teller protocol has proven an ability to bring TradFi and DeFi components together. It is truly incredible how TradFi and DeFi combined ultimately benefit the mass market, rather than just crypto natives.”

To receive a loan, borrowers submit their on-chain credentials along with their off-chain credentials in the form of a credit report from the Credit Bureau of Singapore. With this information, a borrow bid request is created and analyzed by Teller’s Credit Risk Algorithm. The bid request is then presented to lenders who can use their funds to fill the loan in USDC. The loan value can range from $500 to $6,000 in USDC, with the APY ranging from 8% to 16% for lenders. An unsecured Credit Card Loan in current Singapore TradFi markets has an APR of around 26% for borrowers.

Standing on the Shoulders of Giants

Built on Polygon, the leading platform for Ethereum scaling and infrastructure development, SG Loan users will be able to avoid high gas fees and latency associated with Ethereum while still prioritizing decentralization and security.

“Polygon seeks to be the bedrock of the next stage in the Web’s evolution and in DeFi — and the Teller protocol being built on Polygon is a testament to the ingenuity and value-creation bridging the gap between TradFi and DeFi, ” said Hamzah Khan, Head of DeFi and Labs at Polygon. “We are grateful to be a part of bringing these financial opportunities to those in Singapore and excited for the innovation being built throughout DeFi.”

The two organizations are no strangers to collaboration, with Teller consistently enlisting Polygon as a key integration.

Next Stop: Worldwide

Teller team members, partners, and community members are optimistic about the strides towards adoption SG Loans is making for DeFi consumers in Singapore and across the globe.

“As Global Community Lead at Teller, it’s inspiring to know that we’re aiming to provide financial services to where it is needed most. We are seeing blockchain adoption in places like El Salvador and Ukraine which are two regions that have historically lacked access to efficient global financial services. With the adoption of digital assets, millions of people who previously had no records of ownership or income can now access credit and scale their businesses beyond the informal economy.”

Teller users can continue to expect the release of more exciting and innovative developments in unsecured lending.

To use SG Loans, please visit app.sg.loans/.

​​Join the Teller Community

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For more information: teller.org

Teller Debuts Unsecured Lending to Singaporean DeFi Consumers with SG Loans was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Teller Today & Tomorrow

With the successful launch of V1 in Q4 of 2021 and the upcoming launch of V2, there’s been no shortage of developments and activity at Teller. Keeping that pace, Teller is pleased to celebrate another big milestone for the organization and DeFi alike.

Teller has recently secured strategic funding led by Blockchain Capital, Franklin Templeton, Toyota Ventures, Bessemer Venture Partners, Upstart Network, Signum Capital, United Overseas Bank, in addition to alumni from PayPal, Fundera, and Bison Trails.

The support provided by these partners enables Teller to further pioneer DeFi’s journey into unsecured lending.

“Teller is paving the way for a traditional financial primitive to enter the DeFi space: data-driven, unsecured lending and borrowing. The ability to append data to a loan request will transform how we interact with DeFi and unlock lending opportunities only currently available in traditional financial markets,” said Ryan Berkun, Teller’s Founder and CEO.

When user permitted data is appended to a loan request, consumers can unbiasedly be assessed for credit and barriers to entry begin to dissolve.

Lending in DeFi Now

DeFi protocols today account for $200B+ in total value locked (TVL), primarily from overcollateralized lending and trading applications. The undercollateralized market is emerging as the next sector of DeFi, with projects such as TrueFi ($900M+ TVL) and Maple Finance ($500M+ TVL) leading the way for undercollateralized business lending.

“Unsecured lending is a thorny problem in the pseudonymous on-chain world and one of the largest opportunities for DeFi,” said Bart Stephens, Co-Founder and Managing Partner of Blockchain Capital. “The Teller Protocol enables traditional and crypto native lenders to use the best credit scoring techniques possible while preserving privacy and tapping into decentralized liquidity pools.”

Evolving Market Participation

Financial institutions are opening up to the opportunities and novel business models that DeFi proposes. As we saw in 2021, major brands have entered the web3 ecosystem. We’ll see a similar pattern in DeFi in the upcoming year. Teller is in a position to power these mainstream players with a lending software that operates akin to their native system today.

Institutional lenders will be able to create their own data-driven criteria for committing assets, based on rules and filtered by asset request information. Lending can be automated by individuals, companies, protocols, DAOs, and other asset suppliers. This new branch of DeFi native lending software will broaden the reach of part participation in global capital markets.

Breaking Down the Protocol

The Teller protocol functions similarly to a limit order book, where buy and sell orders for loans are available to be executed at pre-specified parameters. Data used for CRA (credit risk analysis) is bridged from off-chain to on-chain for use with loan requests via bids and asks. Once there is a matching bid or ask between a borrower and a lender, the two parties will transact directly, based on the data that is provided or required. Borrowers requesting assets propose a loan request, and lenders supplying assets commit them to a loan request they select.

The terms of the loan are signed by the borrower and lender, and the loan is submitted by the filler on-chain through an atomic match. Funds are then dispersed to the wallet requested by the user. The status of the loan is tracked by the protocol and is either active, late, default, or closed.

A loan origination fee, to be determined by the governance contracts, is charged by the protocol and is automatically accrued to the DAO treasury.

Lenders also have the ability to pre-commit capital for an asset loan request that matches particular criteria. For instance, lenders can pre-commit assets to any user who meets, or is above, a certain benchmark.

Adding a new development, the protocol now allows asset loan requests to append any amount or type of data, as provided by and shared by the borrower at the sole discretion and control of the borrower. This data can include details on a borrower’s financial standing, social status, or identity. The protocol is data agnostic and does not form an opinion of the user.

Join the Teller Community

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For more information, please visit: https://teller.finance

Teller Secures a Strategic Funding Round from Major Partners to Decentralize Unsecured Lending was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

TL;DR; Lending in traditional, centralized finance is composed of many factors, and this complexity in turn restricts consumer access.

Access to Credit Today

In the tumultuous financial times consumers across the world have become all-too familiar with, access to credit has the capacity to significantly alter an individual’s financial situation. To add to the madness, banks assess a consumer’s ability to receive credit, and on which terms to receive it, or creditworthiness, differently across countries, markets, and financial backgrounds.

Despite the similar characteristics of centralized banking institutions throughout the world, there is immense variance in how creditworthiness is determined from country to country.

Consumers in the United Kingdom are assessed by three credit agencies, all of which have different scoring ranges. Canda, with a system most alike to that of the United States, analyzes payment history, utilization, age of accounts, and income in its judging of consumers. Though France has no centralized reporting agencies, large applications for credit will require extensive income and spending records.

Globally, the headache associated with the obstacles of accessing and using credit from centralized institutions can be enough to discourage consumers and make them think twice.

Reporting agencies in the United States determine creditworthiness with an extensive layer of complexity, via the FICO Score. To help break down the intricate nuances of the FICO score, credit reports, and creditworthiness in the US, Teller’s own Udai Parvathaneni shares his insight on common characteristics of credit. Prior to Teller, Udai spent years at Citi Bank and TD Ameritrade, among other revered institutions of centralized finance, before seeing the potential of decentralized finance to better the lives of consumers everywhere.

Interview with Udai Parvathaneni, Credit Risk Lead at Teller Finance

Chase: Speaking comprehensively, what is the definition of creditworthiness?

Udai: Creditworthiness in mathematical terms is the inverse of Probability of Default multiplied by Severity, where Severity means the expected amount during delinquency, divided by the Total Credit Limit on the customer.

For Ex: A customer who has a $10,000 credit limit has a probability of default of 0.5. When the customer defaults, the customer has a balance of 9,500 so severity here is 9500 divided by 10,000 which is 95%. In reality, that is 95% times the probability of default that is 0.5 and would give you the 95% multiplied by 0.5 which equals 0.475.

Considering that 1–0.475 equals 0.525, this is your ability to pay back the amount that is given out to you based on your credit history. This 0.525 is reflected as a FICO score with ranges between 300 to 760 for consumers and this is something that we have been following for so many years in the past in the US. No matter how you write this number, it could be between 0 and 1 in the above case where it comes out to be .525 in my example, or it could be between 300 to 760, the fundamental definition is the same.

Chase: What else besides a FICO score is used to determine creditworthiness?

Udai: There are many factors involved. For instance, how much high leverage do you have? What is the stability of your income? The number of assets and the value of the assets that are tied to your FICO score is also considered, in addition to the duration length of your file on record.

The critical aspect is your payment behavior, whether it’s your utility bill, cell phone bill, or credit card bill. This is viewed very closely by anyone who is looking at your creditworthiness. If you take your obligations lightly and don’t pay on time, you will be penalized for it, as this is considered risky behavior.

Chase: At what age should the average consumer start to consider building credit? About how long would it take them to reach a status of “Good” (FICO 670–739)?

Udai: Typically when you receive your social security number or open a bank account, you should start thinking about building your credit score. This is the time to start building your creditworthiness and let the credit models understand your payment behavior, so that they can provide you with an accurate score

Chase: Once decent creditworthiness is established, what are some tactics to maintain and improve creditworthiness? What will harm a consumer’s creditworthiness?

Udai: High utilization on a credit card will be harmful, so always think of having more credit on your credit card than needed. For example, if the credit card company offers you a credit limit increase, accept it whether you use it or not.

Do not leave any balance on the credit card by the end of the due date. All of your auto loans and other bills should be paid on time so no delinquency will be visible on your report. Also, a high number of inquiries on a social security number will be considered harmful and be perceived as a desperation for credit.

Borrow Today with Teller

With the vast number of lending platforms being built and in use today, consumers can harness the power of cryptocurrency and decentralization without jumping through the hoops of lending with centralized finance. Start secure or unsecured borrowing and earning yield on deposits at https://alpha.teller.finance/ today.

You are worth it: Insights on Creditworthiness was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

Summary

On July 30, 2021 representatives of the Immunefi bug bounty platform reached out to Teller Finance on behalf of a whitehat hacker to disclose a critical bug in one of the Teller smart contracts for the TDAI token. The vulnerability was fixed within two hours of being reported and before any malicious actors could exploit it. All funds are, and continue to be SAFU.

The uncovered vulnerability essentially would have allowed any malicious actor to initialize the underlying beacon proxy of the TToken contract to point to their own contract and allow them in turn to call the selfdestruct() function in their contract. This would render funds in the TDAI token inaccessible. Teller Finance fixed the vulnerability by initializing the beacon proxy, so that it could not be exploited by any potential malicious actors.

Teller, DeFi’s Credit Protocol

Teller is an algorithmic credit risk protocol, built to enable the creation of decentralized lending markets that can offer unsecured loans. The protocol’s unique cloud-based infrastructure can connect to, and privately compute credit and banking data to generate individual loan terms based on a users’ creditworthiness. Teller Protocol was designed to develop decentralized loan products, without collateralized debt, reducing consumer risk and costs. Teller can interoperate with centralized finance data, offering everyone the freedom to develop a new wealth of trustless financial instruments.

Vulnerability Analysis

As noted above, Immunifi reached out to Teller Finance on Jul 30, 2021for help with disclosure assistance — a public service that Immunifi provides to whitehats and the DeFi community. When a vulnerability in a project is discovered but no bug bounty exists, Immunefi facilitates disclosure between the whitehat and the vulnerable project, supporting the process in whatever capacity that is required.

What was the issue?

The vulnerability had to do with the TDAI beacon proxy implementation contract not being fully initialized during deployment.

The TToken contract deployment script takes the following steps:

1. Deploy InitializeableBeaconProxy & Implementation Logic Contracts (neither of these contracts should be interacted with directly)
2. Deploy UpgradeableBeaconBFactory with constructor arguments using contracts from Step 1)
3. The UpgradeableBeaconFactory create a Minimal Proxy that points to the InitializeableBeaconProxy deployed in Step 1)
4. The UpgradeableBeaconFactory initializes the newly created Minimal Proxy_Initializeable Beacon Proxy (from Step 3) with it’s own address which tells it which Implementation Logic Contract to use.

The Vulnerability:

1. The original InitializeableBeaconProxy for the TDAI contract was not initialized during the setup script steps.
2. If left unchecked, any malicious actor could have initialized it with a contract that has an external function implementation() -> address that returns a contract address containing ANY function with the selfdestruct() function in it and then call it.
3. The original Initializeable Beacon Proxy contract would then be destroyed, rendering the Minimal Proxy (from Step 3 in the setup) useless since it’s hardcoded implementation address is the Initializeable Beacon Proxy and cannot be changed.

Immediate Vulnerability Fix

The fix was to initialize the original InitializeableBeaconProxy with any 0x0…1 address so that it could not be initialized by anyone using a malicious address.

function initialize(address beacon, bytes memory data) external payable {

assert(

_BEACON_SLOT ==

bytes32(uint256(keccak256(“eip1967.proxy.beacon”)) — 1)

);

require(_beacon() == address(0), “Beacon: already initialized”);

_setBeacon(beacon, data);

}

Teller Finance deployed the fix on Jul 30, 2021 at 10:59 pm UTC.

Long Term Solutions for Vulnerability Mitigation

Teller Finance will be implementing more stringent controls on deployment and upgrade procedures, as well as in-depth defensive programming techniques and automated tooling that will ensure smart contract state during deployment and when any public methods are called.

Teller Finance and Immunefi Bug Bounty Program

Teller Finance is partnering with Immunefi to offer standing bounties for white hat hackers and to provide clear channels for vulnerability disclosure.

Bug bounties can be submitted to the Immunefi platform here.

Acknowledgments

The team at Teller Finance would like to sincerely thank Immunefi for helping to swiftly facilitate the disclosure and coordinate an effective response. Bug bounties are essential to our efforts to continue delivering the most reliable platform to our users.

Immunefi Bug Find, Post-Mortem, & Bounty Program was originally published in Teller Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’re thrilled to announce the launch of the Teller protocol Alpha, which allows users to borrow secured and unsecured loans on Ethereum’s Mainnet. At present, the Alpha is only accessible for users who own a Fortune Teller NFT and are able to stake their NFT to the protocol. Note, unsecured loans are limited for use with our whitelisted dApp integrations. To date, we have integrated with both Uniswap and Compound.

👉 Access Teller’s Alpha Here👈

Teller is an open-source protocol that interacts with consumer data to calculate default risk and offer unsecured crypto-asset loans. Users can supply liquidity to the protocol’s lending pools and earn interest from repaid loans.

Teller leverages borrowers’ credit history to calculate an annual interest rate based on market conditions vs. consumer credit risk, reducing or eliminating the need for collateral.

Guide to Alpha

Welcome to Teller! There are two main use cases for the Alpha:

• Secured loans, available for use in Uniswap (leveraged trading) & Compound (yield farming)
• Unsecured loans, available for use in Compound (yield farming)

More dApps incoming. We have Yearn, Aave, and Pool Together prepped on our testnet.

👉 Access Teller’s Alpha Here👈

First up: Stake your Fortune Teller NFT

Head to the navigation bar and click “Stake NFT.” The NFT staking modal will pop up, where you can click “Stake.”

Second up: Take out a loan

Head to the Borrow tab on the navigation bar.

Select the loan you’d like to use — remember secured loans offer up to the max loan cap as long as the collateral is deposited, whereas unsecured loans offer a loan size up to the total NFT base loan amount staked.

Unsecured loans are made available by EITHER connecting your bank account OR linking your staked Fortune Teller NFTs.

You can link multiple NFTs to one loan. Note, during Alpha we do have a set loan cap! Even if the total base loan amount of all linked NFTs exceeds that cap, the loan will only be allowed for a loan size up to the loan cap.

After you connect a bank account OR link your Fortune Teller NFTs to the loan, click “Request Terms” to generate the borrow terms below.

Note, the APR on an unsecured loan is currently equivalent to the supply rate for the asset (DAI in our case) on Compound. Secured loans have a shifting APR based on the amount of collateral provided.

Click on “Accept Terms” to submit your loan terms on-chain. Once the on-chain transaction completes, the third (and final) borrow step will appear to take out the loan. Click on “Request Loan” to draw the funds.

Third up: Use the loan

Head to the Dashboard tab on the navigation bar. On your dashboard, click on the Spend section.

Both unsecured and secured loans can be deposited into the Compound dApp to earn interest *plus* participate in Compound’s $COMP liquidity mining program.

Only secured loans can be used to leverage trade on Uniswap. Secured loans can use as little as 20% collateral.

Guardrails for Alpha

1. We have instituted an initial 1,000,000 DAI TVL Cap. As more users test the platform, we’ll increase this TVL limit.
2. Deposits are disabled for now. Our team has deposited the initial 1,000,000 DAI for liquidity. Pending final security tests, an additional 4,000,000 DAI will be deposited in the next two weeks.
3. Once an NFT is staked, it cannot be unstaked until after Alpha. The NFT can be seized and sold on an auction if an unsecured loan is not repaid within 30 days after the due date.
4. Only wallets who claimed their NFT before May 15th are eligible to stake. We will perform a staking upgrade (after week one of Alpha) for any wallet that claims between today and Monday, May 24th, 2021.
5. Each loan is capped at 25,000 DAI. As we better understand repayment activity, we can increase this cap. While multiple NFTs can be linked to one loan, the per loan cap is still 25,000 DAI.
6. There is a 60-minute rate limit between loan generation requests. If you take out a loan, be prepared to wait an hour before requesting another loan.
7. Following the completion of Alpha, APY generated during alpha — from assets deposited by our team — will be pro-rata distributed amongst NFT stakers.

Expanding Alpha

Next up, the team will focus on adding additional dapps to the Alpha version, a special L2 deployment, and the dynamic NFT upgrade. Please share your feedback, thoughts, ideas in the discord channel — we are excited to release Teller’s Alpha to the community.

If you are a solidity developer, and would like to use your chops to help expand Teller’s dApp ecosystem, reach out to our admins on Discord. We are actively searching for engineerings who would like to integrate new dApps into the Teller protocol.

👉 Access Teller’s Alpha Here👈

Join the Community!

For more information on how to take part in our Protocol Alpha, or become a contributor to Teller, please join our community Discord, or contact us at hello@teller.finance! We look forward to having you join our team as an early contributor and Fortune Teller.

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