{"id":265442,"date":"2021-06-03T08:56:28","date_gmt":"2021-06-03T05:56:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/new-defi-passport-could-enable-under-collateralized-crypto-loans\/"},"modified":"2021-06-03T08:56:28","modified_gmt":"2021-06-03T05:56:28","slug":"new-defi-passport-could-enable-under-collateralized-crypto-loans","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/new-defi-passport-could-enable-under-collateralized-crypto-loans\/","title":{"rendered":"# New DeFi \u2018passport\u2019 could enable under-collateralized crypto loans"},"content":{"rendered":"

“# New DeFi \u2018passport\u2019 could enable under-collateralized crypto loans <\/strong>”
\n<\/p>\n

Decentralized finance (DeFi) protocol Arcx has announced the launch of Sapp<\/a>hire v3, a DeFi passport allowing crypto users to pseudonymously build and verify their reputation on-chain.<\/p>\n

Announced<\/a> June 2, the DeFi passport will score users on a scale between 0 and 1,000, with Arcx advancing that the passport \u201cincentivizes reputation-building and curates on-chain identity into DeFi.\u201d<\/p>\n

In the absence of a DeFi passport, Arcx asserts that \u201cprotocols are left to treat every user the same, occasionally giving preferential consideration to wallet size, institutional backing, or restrictive KYC.\u201d<\/p>\n

Arcx expects its passport will be integrated onto many DeFi protocols, predicting Sapphire will allow projects to offer \u201clow-collateral loans and high-yield farms\u201d targeting users with high credit scores. As such, Arcx\u2019s passport could facilitate growth in the emerging sector of DeFi-powered under-collateralized loans. <\/p>\n

Speaking to Cointelegraph, the CEO and co-founder of institutional under-collateralized loan protocol Maple Finance, Sidney Powell, commented that \u201cArcx\u2019s passport will help bring under-collateralized loans closer for retail DeFi users.\u201d<\/p>\n

Although Powell stated \u201cthere is no doubt that stickier reputations and identities would be positive for retail under-collateralized loans,\u201d he speculates that the use of zero-knowledge proofs could bolster the passport\u2019s adoption \u201cby encouraging users to share off-chain information about themselves in the confidence that they maintain confidentiality.\u201d <\/p>\n

Powell added that the Sapphire passport should consider a loan\u2019s \u201caffordability,\u201d stating:<\/p>\n

\u201cAn address may have had a great record of repaying $10K loans on Compound, but how creditworthy would they be on a $250K loan? This is something Arcx can address over time with more data.\u201d\u00a0<\/p><\/blockquote>\n

Looking forward, Arcx hopes to evaluate individual scores for a range of criteria, including their \u201cAirdrop Score\u201d and \u201cYield Farming Score\u201d \u2014 which estimate the likelihood of an address holding onto airdropped or farms tokens over the longer term, and a \u201cGovernance Score\u2019 that assesses whether an address is likely to participate in on-chain governance.<\/p>\n

The protocol also aims to provide \u201cTrader Scores\u201d intended to ascertain whether a user is employing bots to execute trades, with Arcx suggesting DEXes could offer reduced trade fees to addresses verified not to be using bots.<\/p>\n

Arcx also revealed it recently raised $1.3 million from top crypto investors including Dragonfly Capital and Scalar Capital, bringing its total sum raised to $8.2 million. Tom Schmidt of Dragonfly Capital stated:<\/p>\n

\u201cDeFi today is like the Wild West. People can walk up to any random protocol, front-run users, rack up a bunch of bad system debt, and bounce over to the next town. If we\u2019re going to build a new global financial system, we\u2019re going to need something better than the pseudonymous systems we have today.\u201d<\/p><\/blockquote>\n