On August 30, CryptoDane, Head of CreDA, was invited to share his work on CreDA Protocol, a leading credit prediction machine in DeFi, at the, “Elastos Web3 4th” with the Chinese Community. According to CryptoDane, a credit rating and credit prediction machine are undoubtedly critical elements that will open up a vast array of use cases in DeFi. CreDA Protocol’s vision is to become that most important DeFi lego. Using the services of its credit prediction machine, CreDA will lead DeFi into a new era of credit assets.

CryptoDane’s talk is translated below in its entirety:

Hello everyone, my name is CryptoDane. I’m currently the project manager of CreDA Protocol. I’m greatly honored to share with you Creda Protocol on Elastos’ fourth anniversary.

Over the past year, the whole DeFi world developed at a speed far beyond what we could have imagined. There are also a large number of DeFi participants and projects in Elastos Community. Only by standing on the shoulders of giants can we see higher and further. CreDA Protocol is fortunate to be growing up in the fertile soil of Elastos community, and it will soon set sail as the world’s first credit prediction machine.

First of all, why do we need credit prediction machines? The best answer to that question is what Benjamin Franklin once said, “Credit is wealth.” The development of DeFi is fantastic, but we have to admit that it remains rather limited. In the DeFi world, most of the current lending platforms operate in the form of over-collateralization. Because of over-collateralization, the asset utilization rate is low. In addition, since digital assets are needed as collateral, the user range is greatly limited.

In the traditional financial market, the credit loan market based on credit ratings is several times larger than the mortgage loan market. Obviously, in the world of DeFi, huge potential remains to be explored in the credit loan market. A credit rating or credit prediction machine is undoubtedly the key element that brings many new use cases to DeFi in the future. CreDA Protocol’s vision now is to serve as the most important element for DeFi. Based on the services of the credit prediction machine, CreDA will lead DeFi into a new era of credit assets.

Secondly, how does the CreDA Protocol work? Through modeling, analysis, and deep aggregation of the on-chain data, the CreDA credit prediction machine builds the prediction machine network and trusted computing network through the W3C-compliant, DID identity protocol (Elastos DID), and models and analyzes the historical data of participants on-chain, thereby providing DeFi protocols with robust evaluations of user credit scores.

Besides on-chain data, CreDA Protocol’s credit prediction machine is also capable of connecting on-chain data with off-chain data. The prediction machine’s node network is able to calculate the credit for on-chain users and send the results to smart contracts on-chain. To obtain data, the smart contract will send a data request – that is, a request contract. Then, the CreDA credit prediction machine registers the data request as an “event,” sends the data request to the corresponding node, and accepts the node’s bid. Subsequently, an appropriate number of prediction machines of specific types are selected to complete the task. The prediction machines selected by the CreDA credit prediction machine obtain all the data, verify and aggregate the data, and finally calculate accurate results.

Thirdly, apart from the credit rating service based on the credit prediction machine, what special functions does CreDA Protocol possess?

Through transforming the on-chain credit data into NFTs, CreDA Protocol enables decentralized credit ratings and lending algorithms to run automatically based on NFTs. Each credit NFT is generated based on a decentralized identity (Elastos DID), which includes the asset status in the wallet address bound by the identity, the interaction status with each DeFi protocol, and the credit score calculated by the credit prediction machine. Moreover, enough asset operation and interaction interfaces are reserved.

Therefore, the credit NFTs minted by CreDA Protocol will have the following features:

1) Scalability: The credit NFT keeps sufficient operation interfaces to make it easier to access with other DeFi protocols. If some functions or credits of the credit NFT are being used after an agreement is approved by the user, the agreement will write status information into the NFT, and inform other DeFi protocols about the use status of their credits, thereby incentivizing them to assess the risks of the remaining credits.

2) Upgrade-ability: To motivate loyal users in the credit ecosystem, the credit NFT is also equipped with the feature of additional upgrade. When credit score requirements are met, users can also issue payment in CreDA tokens to upgrade their current credit NFT. More advanced credit NFTs confer more obvious and direct rights to their owners, making it easier to be favored by DeFi protocols.

3) Credit Network Synergies: Based on the flow of funds between wallet addresses, the credit prediction machine can establish a credit network through which the connection between credit NFTs can be analyzed. With the expansion of a robust credit network, the credit prediction machine can calculate more accurate and price credit ratings. The more users a single NFT credit network accrues, the more rights it will accrue.

Using credit NFTs, CreDA Protocol also introduces a brand new form of contracts called credit contracts into the DeFi world. The participants in credit contracts will be holders of credit NFTs, with corresponding content confirmed through smart contracts.

Scenario 1: Credit Loan. A borrower can borrow a certain amount of money from others or the fund pool through a credit contract, and pay interest and principal as per the conditions of the credit contract.

Scenario 2: Credit Insurance. Rather than paying a deposit for insurance in advance, an insurer pays and collects the relevant compensation and insurance expenses as per the conditions of the credit contract after the underwriting process is completed. All relevant credit contracts will be automatically included in the credit data acquisition category by the credit prediction machine, and will serve as important factors for calculating credit scores.

I hope that everyone has at least gained a broader understanding of CreDA Protocol. Follow CreDA on Twitter, and stay up to date; we will soon launch our testnet on Arbitrum network. We are looking forward to your active participation.

Finally, I would like to express my gratitude to the Elastos community for supporting CreDA Protocol, and I wish everything goes well with Elastos. Thank you very much!