Introducing Credit Ratings for DeFi 2.0

With ChainScore’s credit ratings, we rate the creditworthiness of investments, assets, bonds, debts and in some cases, of the services provided by DeFi protocols but not of individual consumers.

Institutional investors, such as pension funds, mutual funds and banks have different restrictions on the amount of risk they can (and they are willing to) bear. Our Credit Rating makes DeFi investments simpler to assess and provides retail and institutional investors with information that assists them in determining whether the investment will be able to meet their obligations.

Investors can then make decisions based on credit risk and risk-return expectations. We would help issuers, financial institutions, managed funds, project finance companies, and structured finance protocols to make decisions with accurate and timely credit opinions on the credit market based on sound analytical methods, accurate statistical measurements and market simulations.

Our credit rating facilitates the trading of assets, specific securities (debt/bonds, or equities), and structured finance instruments on a secondary market, by analysing issuers of debt and the agreement on investment.

Use cases

Marketplaces

Marketplaces with assets that derive their value from a set of parameters such as rarity, issuer, past transactions and more.

Secondary Markets

Markets build on DeFi markets to facilitate risk-minimized assets by either combining assets with different risks and/or tranching assets based on risk. The secondary market may offer a variety of assets that can vary from debts to tokens, from fragmented to centralized, and from illiquid to very liquid.

Structured Assets

Structured assets are financial instruments available to investors with complex financing needs, which cannot be ordinarily solved with conventional financing. Collateralized debt obligations (CDOs), synthetic financial instruments, collateralized bond obligations (CBOs), and syndicated loans are examples of structured finance instruments in Traditional Finance.

Making DeFi Investments simpler

To consumer-facing DeFi protocols such as crypto banks, portfolio tools, and risk management protocols can show ratings for the user’s investments/holdings. This would also make their consumer’s investment decisions easier when consumers can look for credit risk ratings before making the investment to be safe and secure.

and much more…

At ChainScore, we aim to revolutionise DeFi by enabling products to be built with financial risk evaluation and our risk management framework, for institutional investors and users from TradFi.

How

Through ChainScore Network’s data providers, we index data about the investment — such as its performance over time, its holder/investors, agreement, potential risks and more. Upon mapping the probability and severity of loss, we issue a risk rating on that asset in the range of (AAA to D) with AAA, AA, A, BB being Investment grade ratings and the rest being speculative grades with higher risk returns.

Credit Ratings in Finance

Majority of the financial transactions in finance depend on trusted credit rating agencies for their ratings and risk assessments to make decisions. Credit rating is a highly concentrated industry; a few credit rating agencies have the monopoly of 80–90% of the rating business, with zero transparency on their parameters and algorithms used for credit analytics. Due to this, we have seen criticism due to cases of inheriting bias, discrimination and incorrect data.

We solve this with complete transparency and security with decentralization. All our algorithms and research is open-sourced and published in peer-reviewed journals.

Partner with us

We have partnered with multiple projects offering DeFi investments and products, to use ChainScore’s Credit Risk Ratings to rate their investments.

Feel free to contact us at hello@chainscore.finance

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Credit Rating Protocol for DeFi

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ChainScore

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Credit Rating Protocol for DeFi

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