Dragonfly, Scalar are backing a startup that calculates DeFi 'credit scores'
June 1, 2021, 3:56PM EDT
1 min read
An upstart crypto project is looking to add a bit more trust to the generally "trustless" market for decentralized finance.
ARCx revealed its new "DeFi Passport" Tuesday. With the DeFi Passport, users can leverage their on-chain activity to prove their creditworthiness and thus qualify for additional benefits across various crypto protocols — similar to how high credit scores can help investors clinch lower rates.
The project has clinched the backing of a number of big investors in the crypto market, including Dragonfly Capital and Scalar Capital. Those crypto funds poured $1.3 million in a recent round for the firm alongside LedgerPrime. To date, the project has raised $8.2 million.
A user's passport score will be based on a scale from 0 to 999, with the 999 score "being the most lucrative," according to a press release.
In an interview with The Block, ARCx founder Kerman Kohli said that projects can leverage the product to offer high score DeFi-era higher allocations or more leverage. "You can create a yield farming strategy that only targets users with the highest score," he said.
"The vision moving forward is to make the ARCx DeFi Passport and Credit Score a key lego-block within Decentralized Finance," the release added. "Beyond the initial proof of concept with the ARCx Credit Score, the opportunities for pseudonymous profiling and scoring of identities based on on-chain activity in a decentralized manner are endless."
Sygnum Bank’s Digital Asset Outlook 2022 report analyses the developments that shaped the crypto industry in 2021, and lays out Sygnum’s strategic outlook for the market and its key sectors and trends for the year ahead.
With more than $100 billion in market cap across all chains, it is likely that the DeFi market cap will grow to $200 billion by 2025. However, many users still face various technical barriers when using decentralised platforms to do on-chain farming, staking and trading, while off-chain solutions face liquidity issues, fiat restrictions and the lack of a central multichain to support crypto assets and institutional-grade custodians.
The Federal Reserve dropped a new central bank digital currency white paper on Thursday. While largely avoiding the topic of crypto, it suggests that a US CBDC could compete with "private digital money."