In retrospect, it's fair to say that a credit rating system was inevitable in the DeFi ecosystem. And, as you might have guessed, a protocol was developed to handle it. This protocol is ARCx, a synthetic asset protocol that unlocks liquidity for interest-bearing assets through its native STABLEx token. ARCx is a relatively new protocol, having completed its ICO in March 2021.
Despite everything, the protocol is always looking to innovate more and has recently set itself the mission of launching this famous “DeFi passport”. What exactly is it?
We will see.
What is the use of having a DeFi passport?
The mission of ARCx is to introduce a service that will measure the financial health of customers, as we already do in traditional finance.
Thus, from Ethereum addresses, we could have a general view of the financial state of a person and their various past actions in DeFi.
We may ask here what is the usefulness of such an assessment? What's the point?
Well, as with insurance systems, a customer who has good scores will then be able to take out loans, for example, with more affordable rates. Conversely, a person with a "bad" score will take out the same loan with higher interest rates. A bit like with your insurance where your penalties make you pay a higher subscription.
Even if there can be abuses of this system, it is so anchored in our operations that we could not ultimately find it in DeFI…
This is actually a new feature that has been in preparation for a long time and will be implemented with the Sapphire (V3) version of the ARCx project.
It's relatively original to propose this and it will certainly give ARCx a whole new light. This will also mark a great step towards improving lending/reimbursement services in DeFi.
By accepting "DeFi passports" (should we be talking about financial scores instead?). In any case, many DeFi protocols, like MakerDAO for example, could personalize their offers and favor addresses with good scores.
The Sapphire update therefore proves very promising for the world of DeFi and in particular for good borrowers who have always maintained their guarantee collateral and who have repaid the loans correctly.
Finally, the possibility of displaying your financial score can be a very good thing from this perspective.
This will also make it possible to limit risky users in this universe, who sometimes set protocols in motion through reimbursements during periods of high volatility.
ARCx's DeFi passport aims to be comprehensive, providing scores on various DeFi services such as Liquidity Mining , Yield Farming , and more. The presentation and announcement of this update explain that, for example, someone who has received airdrops (and kept them) could automatically receive more because they have demonstrated proficiency in using this type of distributed token.
This is an example of the positive impact of the DeFi passport proposed by ARC.
Finally, you should know that this remains a first in DeFi and that it therefore requires a certain amount of development time. Initially, only the first 100 passports will be distributed. There will be several distribution batches later, of course.
To become a part of it, the ideal way is to register on the company's Discord server .
- Discover ARCx website.
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