CreDA protocol will use AI to provide credit ratings using on-chain and traditional financial data
NEW YORK, Nov. 25, 2021 (GLOBE NEWSWIRE) — CreDA (Credit DeFi Alliance), the world’s first decentralized credit rating service has officially launched its platform following a successful open beta. Modeled after traditional consumer credit agencies, CreDA introduces the concept of personal credit scores into the $200 billion decentralized finance (DeFi) ecosystem populated by cryptocurrencies such as Bitcoin, Dogecoin and Ethereum.
Leveraging existing blockchain infrastructure, CreDA provides a trust architecture for the relatively young and volatile ecosystem and a link between on-chain and traditional financial systems. It aims to simplify transactions for users, minimize risk for lenders and enable access to capital without the need for high amounts of collateral which is currently required by DeFi lenders.
According to Bank of America, over 200 million users are now part of the digital asset universe, yet very few financial institutions would provide them with a loan. Even within the DeFi space, lenders operate in an over-collateralized manner with typical loan-to-value (LTV) ratios below 50 per cent. This means that a DeFi platform with a 50 percent LTV would require a user to deposit at least $10,000 to take out a loan of $5,000. Also most platforms only accept crypto assets as a form of collateral, creating further barriers for participation.
“In traditional finance, the total value of credit-based, unsecured loans is several times that of collateralized mortgage loans,” explains Cassie Zhang, CreDA’s Chief Operating Officer. “Credit ratings are a vital, missing component within the DeFi space. The introduction of CreDA credit scores will enable unprecedented imagination and innovation to protocol users and developers alike. But more importantly, CreDA fulfills the promise of blockchain and decentralized finance, providing the trust architecture needed to…
