> For the complete documentation index, see [llms.txt](https://docs.credprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.credprotocol.com/use-cases/under-collateralized-lending.md).

# Under-collateralized lending

*In DeFi, accounts are assumed to be "unscorable" requiring lenders to over-collateralize loans, limiting access and utility.  Cred Protocol quantifies on-chain lending risk at scale by building one of the first decentralized credit scores.  We're on a mission to expand access to DeFi lending to regular people and underserved communities, helping them access financial resources that make a meaningful difference to their lives.*

“Lending” is one of the biggest applications of Decentralized Finance (DeFi) with $40B of loans being serviced by the top three lending protocols; Aave, Compound, MakerDAO (on the Ethereum blockchain).

Most DeFi lending is over-collateralized, which has the benefit of reducing systemic default risk at the expense of capital efficiency.  “Over-collateralization” isn’t suitable for consumer lending, where borrowers want leverage their good reputation to amplify their access to financial resources beyond what they currently have.

Institutional under-collateralized lending is happening today through protocols such as Maple Finance and TrueFi however loans are approved by governance token-holders so risk-underwriting  is fundamentally “human powered” and limited in scale.

Consumer lending in traditional finance is a $4.5T market, almost three times larger than the $1.5T institutional lending market, however DeFi-powered under-collateralized consumer loans aren’t happening in DeFi *yet*.  To enable consumer lending, we need to quantify risk at scale, which requires an algorithmic approach, which is a “credit score”.  That's what we're building at Cred Protocol.