Cred Protocol Unveils First Decentralized Credit Scores


Cred Protocol, a decentralized credit scoring startup unveiled the results of its first automated credit scoring system for decentralized finance (DeFi) users.

Cred Protocol CEO Julian Gay presented the findings in a Twitter thread, which showed how Cred successfully used past transaction behavior on the Aave Protocol to assess the creditworthiness of future borrowers based on on-chain behavior in the DeFi space.

Using machine learning to assess time-based account attributes and analyze the user’s past transaction behavior, Cred Protocol generates a health factor score that predicts the likelihood of future liquidation for a single address. , which Gay said was one of the strongest baselines. solvency predictors.

Julian Gay’s Twitter

Cred Protocol claims to make decentralized finance more accessible to the world by establishing reliable credit scores that would allow “anyone with an internet connection” and “good financial reputation” to access loans.

Where borrowers and lenders have their creditworthiness assessed by a central authority such as a credit bureau, DeFi makes it possible to run financial services with a peer-to-peer (P2P) system, eliminating the idea of ​​a middleman or from a central authority.

Prominent DeFi researcher Chris Blec raised concerns that a borrower could use multiple Ethereum addresses to bypass credit scoring – to which Gay replied that a potential solution was in beta.

Cred Protocol is a small team of nine people based in San Francisco with additional “hubs” in New York and London. However, Gay says he aims to bring DeFi technology to over a billion people.

In an average article, Cred describe its plans to transition from the Aave protocol and expand its data analytics to other lending protocols like Compound and MakerDAO.

Two years ago, blockchain lending protocol Teller raised $1 million in a seed funding round to integrate traditional credit scores into DeFi.

Related: Decentralized Credit Scores: How Blockchain Technology Can Change Ratings

In November 2021, Credit DeFi Alliance (CreDA) officially spear a credit scoring service that would check a user’s creditworthiness with data from multiple blockchains. CreDA was developed to work with CreDA Oracle by evaluating records of past transactions made by the user across multiple blockchains using artificial intelligence (AI).

Recently, the P2P lending protocol RociFi labs concluded $2.7m seed funding in partnership with asset management firm GoldenTree, which aims to expand on-chain credit ratings for decentralized finance.

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