Under-collateralized lending

In traditional finance, consumer lending is a $4.5T market that's enabled by credit reporting bureaus and credit scoring agencies.

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.