Designed to unify decentralized finance [DeFi] and traditional banking systems, CreDA is introducing the concept of personal credit scores for the blockchain and DeFi space.
The inception of DeFi promised a financial system that not only eliminates the need for central authority systems and institutions but also seeks to offer users interminable access to capital, regardless of location or social standing. Built on this premise, many protocols have been launched to drive this market as well as offer users the opportunity to stake, lend, and borrow assets. However, these protocols, in a bid to mitigate risks, have deployed strategies like over-collateralization with loan-to-value ratios [LTV] typically below 50%. This means that users may have to deposit as much as $20,000 to take a $10,000 loan.
Furthermore, most of the existing DeFi protocols only accept collateral in the form of crypto assets, creating even more barriers for new users to enter this growing space.
William Zhang, Security Architecture Lead at The World Bank Group and advocate for data as capital explains that, “whether you’re a rural farmer in sub-Saharan Africa or a fresh college graduate in Los Angeles, there are still a lot of barriers for accessing capital within the traditional financial systems.”
“While blockchain and DeFi have helped democratize data and finance, there is still a lack of trust that can be limiting for people without existing collateral. But a solution that provides access by rewarding good on-chain behavior and allows new users to earn trust within the system could unlock new possibilities for nearly 2 billion people around the world.”
CreDA, leveraging the benefits of blockchain, the underlying technology of cryptocurrency networks, has set out to introduce personal credit scores, an unprecedented move in the crypto industry. Identified as the missing component of the DeFi space, this unparalleled feature will pioneer a world where billions of people can gain access to capital, even without access to traditional banks.
CreDA’s Credit Scoring
Utilizing the CreDA Oracle, an AI-powered system, the credit scoring platform provides an on-chain rating after careful examination of a user’s transaction history across multiple blockchains. The data collected is used to calculate a credit score for each user. This score, per the company press release, will then be minted into an NFT (non-fungible token) called a “Credit NFT or cNFT”.
The cNFT will enable users to unlock a ton of personalized yet advantageous incentives and rates. But the CreDA platform offers more than just a credit score. After minting a cNFT, users are eligible to take out an uncollateralized loan directly within the platform and can also collateralize the assets of the CreDA fund pool to borrow on other DeFi protocols.
As it continues to partner with crypto market leaders, users will enjoy similar benefits and incentives for staking and lending. Having a CreDA Credit Score will become even more important as assets and services continue to develop within the metaverse.
Built on Ethereum’s Layer-2 protocol, CreDA is capable of operating across multitudes of blockchains including, but not limited to, Ethereum, Binance Smart Chain (BSC), Polygon, Fantom, OEC, Elastos Smart Chain, HECO, and Arbitrum. Per the development team’s report, CreDA Oracle, at the time of writing, has retrieved the collective data of billions of on-chain transactions concomitant with over 90 million unique addresses. This pool, according to the aforementioned report, will help the platform build a reputable, accurate, trustworthy, and reliable credit model that will continue adapting and improving as more data and users are collected and onboarded, respectively.
Prioritizing security and user-friendliness, the CreDA team has integrated many advanced security systems. Furthermore, the project code has been submitted to CertiK, the leading blockchain security company, for auditing and analysis. The team is looking to carry out these audits regularly to ensure that it is safe and trustworthy.
Essentially, CreDA aims to combine traditional financial banking principles and blockchain-based systems to create a holistic user credit score that will act as a vehicle for the proliferation of a world where the inability to access capital as a result of the lack of formal credit score is quelled.
Introducing a unique experience to the crypto space, Chief Executive Officer of CreDA, Fakhul Miah, while speaking about this innovative decision revealed that “credibility” is the missing piece in the DeFi space, further stating:
“… The CreDA protocol enables DeFi platforms to model risk profiles across their user base and offer personalized rates and services, making them more competitive versus industry peers.”