DeFi Strategy, Reputation Score & Marketplace

DeFi lending is one of the most important cases for DeFi, and crypto in general in the future. But to get there, we as a community must overcome some of the barriers currently stopping adoption from happening. Currently, all lending is OVER collateralized. If we compare this to traditional finance, people use their assets for loans, which are deemed UNDER collateralized.

In practice, the protocol can be used anywhere where proof of humanity is required or where on-chain activity needs to be authenticated.

One way to make DeFi lending more accessible and secure for users is by implementing a reputation scoring system based on on-chain data. This would allow lenders to assess the risk associated with borrowers and make informed decisions.

Reputation Score

To start, a user's reputation score can be calculated based on their transaction history on the blockchain. The higher the frequency of transactions and the higher the value of the transactions, the better the reputation of the user. Furthermore, factors such as the ability to repay loans on time, the history of collateralization, and adherence to smart contract rules can also be considered to calculate this score. By using on-chain data, lenders can more accurately assess a borrower's credibility before lending funds.

In addition, implementing a reputation score system on-chain can also prevent fraud and malicious activities. Since all transactions on the blockchain are recorded and verified, it is easier to identify any suspicious behavior and take appropriate action. This can deter bad actors from taking advantage of the system and promote a more trustworthy user environment. In addition, we will open up the following use cases:

  1. Credit Score/Reputation Marketplace: Building on our on-chain reputation system, Vold Protocol can create a marketplace where users can buy or sell credit scores and reputation data. This decentralized alternative to traditional credit scoring systems could be used in various DeFi applications.

  2. Reputation Chain for Credit Score Feed: Vold can establish a β€˜Reputation Chain’ that feeds credit scores into a clearinghouse-like entity. This would standardize the credit scoring process across various platforms and make it more transparent and verifiable.

  3. Web2 Credit Score Company Collaboration: Vold Protocol can collaborate with traditional Web2 credit score companies to bridge the gap between Web2 and Web3 credit systems. This would allow for a more comprehensive credit scoring model that considers both traditional and blockchain-based financial activities.

  4. Other DeFi Side Chains: Future DeFi projects could build side chains on Vold’s credit chain, allowing Vold to control settlement and clearing processes. This would make the ecosystem more robust and versatile, offering various financial products and services.

In conclusion, implementing a reputation scoring system based on on-chain data is a logical step to make DeFi lending more accessible and secure for users. By using this system, lenders can accurately assess the risk associated with borrowers and make informed decisions. Furthermore, it can also prevent fraudulent activities and promote a more trustworthy environment for all users. This is a positive step towards the mainstream adoption of DeFi lending and a safer, more reliable future for the blockchain industry.

Last updated


Vold 2023