A credit score is a statistical value or number that helps lenders assess a customer’s creditworthiness based on their past credit and repayment history.Zoracles has developed an on-chain solution called Zora Score that calculates the creditworthiness of an Ether wallet based on factors such as the wallet’s age, DeFi activity, and loan repayment.
Credit scoring is a standard in the traditional finance industry and is necessary to make and issue loans.Zoracles has developed an API for Zora Score that allows decentralized cryptocurrency lending platforms to not require collateral due to their algorithmic scoring. This is the first of its kind for a cryptocurrency project and protocol.
The Zoracles product team will implement Zora Score in an NFT marketplace as a data point for buyer and seller reputation. Hackers are common in DeFi and this metric protects market participants from trading with people with bad DeFi reputations or with banned wallets.
Zora Score is very different from the typical scoring system of rating agencies. Consumers have the opportunity to improve their traditional creditworthiness with supplemental products and services from companies like Credit Karma and credit partners like banks.
In this era of financial uncertainty and rapid growth, cryptocurrency protocols are evolving at a pace that is no different.Zoracles has contacted several major protocols that require the submission of their Zora Score prior to implementation. The team then developed an NFT exchange product to meet the needs of a broader range of lender protocols, and generated a lot of interest in a standalone product. The product has evolved to include not only the exchange of NFTs, but also the analysis of data assigned to those NFTs.
The next evolution: Unibond
In early May, Uniswap v3 introduced a concept called centralized liquidity positions, denoted as NFTs.In general, liquidity providers are tasked with specifying a price range for their token pairs. These positions are converted into NFTs based on the unique parameters of each asset.
Uniswap v3 NFT is currently an underserved market, while art and collectibles NFT sales are set to exceed $2.3 billion in 2021.
Zoracles plans to use as much data analytics as possible to help buyers and sellers price your liquidity positions based on the percentage of time spent in the region and other factors the team is currently considering, including historical APY. This will address a fundamental lack that other Uniswap NFT asset NFT markets have that does not guide the price of this new asset class.