Credit scores, defi, and Sonic

I have long been vocal about my belief… | by Andre Cronje | Sep, 2024 | Medium (1)

3 min read

10 hours ago

I have long been vocal about my belief that technical evolution happens in stages. You can’t simply go from the message boards like USENET and ARPANET in 1980 to the apps that control our daily lives today, there had to be incremental evolution.

Similarly, even if we look at today’s popular decentralized finance apps, they could not exist in 2017, we first needed the ICO bubble. This period created the amount of assets, standards, and financial value, that allowed decentralized finance to start existing from end of 2018. Uniswap or Compound without any assets would not have many users.

The above illustrates that you require two things, certain social events (like ICO bubble) and certain technical events (like Ethereum launching).

To take it back to the internet analogy, most apps today would not be able to exist on 56k modems. We needed to evolve into ISDN, ADSL, and fibre to eventually have the internet connected world we have today. Similarly, we needed smartphones.

The same is true in blockchain, most dapps in the future that will control our daily lives, simply can’t exist on today's blockchains. They are prohibited by technological and social barriers.

With Sonic launch drawing closer, I believe it breaks through a few of the technological barriers, specifically;

Extremely low latency, going from our fastest competitor at 12s to 700ms. Consensus in Sonic is as fast as information can travel and propagate through the network, and once propagated is final.
True finality, allows for synchronous apps, which allows for very different user experience and interactions
Gas subsidies, removes the requirement for users to have gas funds in their wallet, which removes a very common user on-boarding barrier
Native account abstraction, removes the requirement for users to store private keys and instead use standard authentication methods they are used to, removing another key on-boarding barrier
Gas monetization, adds valuable revenue streams to developers who don’t necessarily want to build financial apps

The above allows for dapps that aren’t simply financial in nature, but I want to take it back to financial dapps for the moment. A big shift in tradfi was the introduction and creation of the credit score, credit scores allowed the following products to exists

Personal loans
Payday loans
Rewards Credit Cards
Secured Credit Cards
Adjustable-Rate Mortgages
Renting Services
Car Leasing
Car Loans
Credit Based Insurance
Buy Now, Pay Later
Postpaid Mobile Plans
Credit Monitoring
Identity theft protection

Unsecured lending globally is a $11.3 trillion market.

Credit scores are fairly simple in their design, its a rich ETL (extract, transform, loan) process that sanitizes financial data and provides a detail analysis ultimately summarized into a credit score.

Knowing that these scores are required to allow the above dapps in defi, in 2021 we set out to extract, transform, and load all loan, trade, and interaction data on most blockchains;

This evolved into over 54bn transactions, almost a petabyte of data processed, more than 500 million wallets actively being monitored with over 15 million recorded loans.

And ultimately gave us the ability to provide a simple scoring mechanism for any address. No KYC required, no personal identifiable information, fully private.

While the above is available for any company, blockchain or dapp interested, Sonic will be the first native integration, allowing direct on-chain access to wallet scoring, making it the first chain that enables devs access to a potential $11 trillion market.

A key shift in both technological and social evolution.

https://blockchainbureau.com/

https://x.com/TheBlockBureau

https://testnet.soniclabs.com/