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

BlockTower Capital, Andreessen Horowitz (a16z) and Sam Bankman-Fried’s Alameda Research led the round by purchasing TRU, TrueFi’s native token, according to a company statement. TrustToken said it would use the proceeds to expand its team and TrueFi’s operations 

“We’re looking to use this funding both to help us scale the protocol, size of that existing market, but also help us to branch into new markets,” TrustToken’s co-founder and CEO, Rafael Cosman, told CoinDesk. 

The round shows investors’ growing interest in DeFi. But while most of the loans in this market are secured with cryptocurrency pledged by borrowers, TrueFi lending does not require collateral.  

In lieu of pledged assets, TrueFi bases lending decisions on credit scores derived from on-chain and off-chain data. Since November 2020, the protocol has originated over $200 million in loans and paid out $1.7 million to lenders, without any defaults, according to the company. 

With most DeFi protocols focusing on overcollateralized lending, “it’s never going to be able to grow to the scale where it can actually take a significant bite out of traditional financing. So a key part of this is actually being able to bring more off-chain data on-chain,” Cosman said.

The round also comes as crypto lending, decentralized and otherwise, is very much on regulators’ radar. In recent weeks, centralized platform BlockFi, which offers interest-bearing accounts collateralized by cryptocurrencies, has drawn the ire of five state regulators.

Celsius, which raised about $20 million last year, has long claimed to demand collateral, though it may quietly have made a few uncollateralized loans.

TrueFi’s on-chain credit scores will be beneficial “for lenders to assess where they want to put their capital,” said Blake Richardson, an investor at BlockTower.