Cryptocurrency News

New DeFi ‘passport’ could enable under-collateralized crypto loans

Decentralized finance (DeFi) protocol Arcx has announced the launch of Sapphire v3, a DeFi passport that allows crypto users to pseudonymously build and verify their reputation on-chain.

announced On June 2, DeFi will score Passport users on a scale between 0 and 1,000, with Arcx further stating that Passport “encourages reputation-building and curates on-chain identities in DeFi.”

In the absence of DeFi Passport, Arxx emphasized that “the protocol is left to treat every user equally, sometimes preferring wallet size, institutional support or restrictive KYC.”

Arcax expects its Passport to be integrated onto multiple DeFi protocols, predicting that Sapphire will allow projects to offer “low-collateral loans and high-yield farms” to users with high credit scores. target. Thus, ArcX’s passport could facilitate growth in the emerging sector of DeFi-powered under-collateralized loans.

Speaking to Cointelegraph, CEO and co-founder of Institutional Under-Collateralized Lending Protocol Maple Finance, Sidney Powell commented that “Arcx’s Passport will help bring low-collateral loans closer to retail DeFi users.”

Although Powell said, “there is no doubt that sticky reputation and identity will be positive for retail under-collateralized loans,” he speculated that the use of zero-knowledge proofs could boost the adoption of Passport “to provide users with off-collateralized loans.” Chains themselves by encouraging them to share information in the belief that they maintain confidentiality.”

Powell said that Sapphire Passport should consider the “affordability” of the loan, adding:

“An address may have a great record of repaying a $10K loan on Compound, but how creditable will they be on a $250K loan? This is something that ArcX can address with more data over time.”

Looking ahead, Arx expects to evaluate individual scores for a number of criteria, including their “Airdrop Score” and “Yield Farming Score” – which estimate the likelihood of an address being airdropped or on farm tokens over the long term, and A “Governance Score” that assesses whether the address is likely to participate in on-chain governance.

The protocol is intended to provide a “trader score”, which is intended to ascertain whether a user is employing bots to execute trades, with ArcX suggesting that DEXs are short on verified addresses not to use bots. May offer trading fees.

ArcX also revealed that it recently raised $1.3 million from top crypto investors including Dragonfly Capital and Scalar Capital, bringing its total to $8.2 million. Tom Schmidt of Dragonfly Capital said:

“DeFi today is like the Wild West. People can walk up to any random protocol, front-run users, bad systems can rack up a bunch of debt, and boom to the next city. We’re going to need something better than the pseudonym systems we have today.”