The results of the first credit score it received on the Aave Protocol are now available. A decentralized credit scoring mechanism called Cred Protocol will soon expand to MakerDAO and Compound.
Cred Protocol, a startup that offers decentralized credit scoring, has revealed the results of its first automated credit score system for users of Decentralized Finance (DeFi).
Julian Gay, CEO of Cred Protocol, described the results in a Twitter discussion. He explained how Cred used past transaction behavior on Aave to evaluate the creditworthiness future borrowers based upon on-chain behavior within the DeFi space.
Cred Protocol uses machine learning to evaluate time-based account attributes, and to analyze past transaction patterns to generate a health factor score. This score predicts the likelihood that future liquidation will occur for a single address. Gay said this was one of the most reliable baseline creditworthiness predictors.
Cred Protocol claims that it makes decentralized finance more accessible by creating trustworthy credit scores. This would allow anyone with an internet connection and a good financial record to access loans.
DeFi eliminates the need for a central authority to assess the loanworthiness of lenders and borrowers. Instead, it allows financial services to be run with peer-to-peer (P2P), eliminating the need for a central authority or intermediary.
Chris Blec, a prominent DeFi researcher raised concerns that a borrower could use multiple Ethereum address in order to avoid credit scoring. Gay replied that Beta was a possible solution.
Cred Protocol is a nine-person team with additional hubs in New York City and London. Gay claims that DeFi technology will be available to more than one million people.
Cred shared in Medium his plans to expand from the Aave protocol to include data analysis for other lending protocols such as MakerDAO and Compound.
Teller, a blockchain lending protocol, raised $1 million in seed funding to include traditional credit scores into the DeFi.
Credit DeFi Alliance (CreDA), officially launched, a credit rating system that would assess a user’s creditworthiness using data from multiple blockchains. CreDA was designed to use the CreDA Oracle. It evaluates records of transactions that were made by users across multiple blockchains using artificial intelligence (AI).
Recent P2P lending protocol RociFi Labs has concluded a partnership of asset management firm GoldenTree for $2.7 million. This funding is aimed at expanding on-chain credit ratings in decentralized finance.