Trustcoins are used to facilitate trust on the WeTrust network. Many of the things we take for granted in the modern world like loans, savings, and insurance, are only possible because of trust, and the blockchain is no different. In order for these types of services to work on the blockchain, there needs to be a token to compensate people who are providing a role as a trusted third party. It’s similar to how banks and insurance companies charge a fee to their customers for serving as a trusted party. Let’s take a look at an example to see how Trustcoins (or TRST) are used to compensate people for facilitating trust on the WeTrust network.

TRST are used by users of our Trusted Lending Circle platform to pay fees to the foreperson organizing the ROSCA. A foreperson is undertaking some degree of risk in organizing a ROSCA, to his or her reputation, or to his or her finances (if the foreperson promises to cover any funds not received in a given ROSCA round). He or she may be the only one who knows all the members of the ROSCA. To compensate the foreperson for this risk, he or she can choose to receive a fee, in the form of TRST, from each pooled round of funds in the lending circle. These fees would be paid out in TRST, regardless of what the currency is being used in the Trusted Lending Circle (e.g., ETH, DGX, or another ERC20 token). Our platform will soon allow users to contribute using any ERC20 token, and the fees paid out to the foreperson will always be in the form of TRST, making them a vital and important part of our network.

Moving beyond this simple example that has been implemented in our prototype on the Ethereum mainnet, there will be additional uses for TRST in our future products. As an example, say we have two people: a LENDER and a BORROWER. The BORROWER wants to borrow money, and the LENDER has extra cash she wants to lend. The LENDER and BORROWER are both fun, social people with a large network of friends, and they have a mutual friend, the LOAN GUARANTOR. This network of people who know each other is shown below.

The BORROWER would like to receive a loan from the LENDER, but the LENDER doesn’t know and doesn’t trust the BORROWER, and won’t give the BORROWER a loan. Since the LOAN GUARANTOR knows both the BORROWER and the LENDER, the LOAN GUARANTOR can facilitate trust between these two strangers. Essentially, the LOAN GUARANTOR can vouch for the BORROWER to the LENDER. In return for providing this service to facilitate trust between these two strangers, the LOAN GUARANTOR will receive a fee to be paid out in TRST, as shown below.

When it comes time for the BORROWER to pay back the loan, the BORROWER will make regular agreed upon payments to the LENDER. If for whatever unfortunate reason, the BORROWER cannot make further payments, then the LENDER will request those funds from the LOAN GUARANTOR (and the LOAN GUARANTOR will probably regret being friends with the untrustworthy BORROWER!). The case where the BORROWER makes regular payments, and the case where the LOAN GUARANTOR must make payments due to the BORROWER’s default, are both shown below.

Since the LOAN GUARANTOR is taking on risk in setting up the BORROWER with the LENDER, the BORROWER pays TRST to the LOAN GUARANTOR for facilitating the loan and helping enable a lower interest rate than they would otherwise have paid when borrowing from an alternative lender. Once again, we see that the TRST token is facilitating trust on our network!