Today marks a significant day for the Spectral community: The launch of the Spectral App V0.3.0 in Open Beta, a big step toward our vision of creating decentralized credit scoring and building a better, more equitable credit assessment infrastructure for Web3.
Since Spectral’s Closed Beta release, the team has been working hard to implement the changes you’ve suggested. This release (V0.3.0) remains an experimental build, so we’re eager to receive more feedback and suggestions as we continue working on our next product release.
Web3 Creditworthiness Starts Here
Decentralized Finance (DeFi) has a serious problem. Given the trustless nature of blockchain technologies, there’s no easy way for DeFi lenders to recover funds when a borrower defaults. Traditional finance has a well-developed credit assessment infrastructure to mitigate this risk. Your credit score allows lenders to determine fairly accurately how likely you are to default on a loan.
When the major DeFi lending protocols were created, rather than developing a new solution or adapting the existing credit infrastructure to DeFi, the protocols simply built around the problem and required borrowers to fully collateralize loans. This has left DeFi capital inefficient and increasingly inaccessible. Only borrowers with significant capital can take full advantage of DeFi borrowing. Token emissions and other methods of rewarding users with governance tokens in proportion to usage have further consolidated power in the hands of a few large players.
DeFi could use FICO or other existing credit scores, but they’d be missing an opportunity. Traditional credit scoring methods are dominated by a handful of credit reporting agencies and credit bureaus and leave much to be desired. Participation is mandatory: you can’t opt-out of being scored, and it’s often difficult to detect and correct costly mistakes. Connecting on-chain user identities with existing consumer databases is a major privacy risk. Imagine the equivalent of China’s social credit system, with insight extrapolated from every digital transaction ever made. Privacy would be impossible.
A far better option for DeFi would be relying on the data available on the blockchain. It would be completely transparent, publicly accessible, and under a user’s control. The only hurdle for an individual user to create a score of their own is the transaction cost, and the time it would take to compile on-chain transactions across dozens of wallets and platforms. That’s why Spectral created the MACRO Score, a credit risk assessment Score that anyone can access at any time on their terms.
Although undercollateralized loans are not yet possible without proper recourse, the existing environment leaves much to be desired with respect to capital efficiency. Credit risk assessment and risk infrastructure don’t exist in the space. Implementing efficient on-chain credit risk assessment will rapidly accelerate capital efficiency. If we ever do see undercollateralized loans, on-chain credit risk infrastructure will be a vital piece of that.
Your Web3 Creditworthiness Cockpit
Spectral’s V0.3.0 App can give you an on-chain credit score in seconds. Simply connect an Ethereum wallet to the App and receive a MACRO Score reflecting your creditworthiness. Use your MACRO Score to start managing a pseudonymous Web3 identity.
Here’s how it works and what Spectral’s App offers.
Powering Spectral’s risk-assessment tools, including the MACRO Score, is a comprehensive DeFi data set and a continuously updated machine learning model created by a team of credit risk professionals and DeFi experts.
Instantly Check Your Score for Free
Connect your Ethereum wallet to the Spectral App by clicking “Connect your wallet” and in a few moments, you’ll receive your personalized MACRO Score. Each Score is timestamped, and you can create as many bundles as you need. Scores aren’t limited to an analysis of a single wallet. Bundling lets you generate a Score for multiple wallets.
Examine Your Personalized Score Ingredients
To understand your Score, Spectral provides personalized insights. Find a breakdown of your Score in seven broad categories with personalized insight into how each category affects your Score and what you can do to improve. Those categories are DeFi transaction history, liquidation history, loan safety margin, age or time-based factors, general wallet history, market conditions, and credit mix. Historical data will provide insight into how your Score has changed over time, helping you track trends. Check out our Leaderboard to see where your Score falls in comparison to your peers. Or hit “share” and tell the world.
Mint a Non-Fungible Credit (NFC) on the Arbitrum Testnet
The Spectral App allows you to mint a Non-Fungible Credit (NFC) token and sync multiple sources of on-chain transactional history into a single composable asset. The NFC is a timestamped, highly-customizable ERC-721.
Bundling allows you to combine multiple sources of transaction history around a single “master wallet” for a comprehensive on-chain credit score. Bundles are named to distinguish them from one another, and the Spectral App will automatically detect an ENS domain owned by the wallet and offer it as a suggested name.
There are two levels of privacy offered: Private bundles allow you to link different wallets and sources of on-chain transaction history in a privacy-preserving way. Public bundles allow your linked wallets to be published on-chain and visible to any party. The benefits of composability will be maximized but at the cost of your privacy.
For this release, NFC minting is only available on the Arbitrum Testnet. Please join our Discord and reach out to us, and one of our team members will be happy to provide you with some testnet ETH.
Monitor Your On-chain Creditworthiness Journey
The Spectral App provides a handy inventory of all wallets connected. Easily monitor your on-chain creditworthiness by tracking outstanding loans or looking at past activity. Review high-risk loan activity; view current positions, assets, balances, NFTs, alerts, and low health warnings. Take a closer look at your MACRO Score by viewing score ingredients, collateral, and health factors across different DeFi protocols.
The Spectral App also contains various other features, many suggested by our Closed Beta testers. Among the features available are a Leaderboard of Scores, allowing you to see where you rank with respect to your peers; the ability to share your Score on social media, and light and dark modes for all-night degen activity.
This version release is just the beginning. Forthcoming builds will continue adding features. Watch for: historical MACRO Scores, personalized loan opportunities tailored to your Score, and–as we deepen our data sets and continue adding DeFi protocols and NFT transaction data–more sophisticated and accurate indices of your on-chain creditworthiness and financial health.
Our Vision for the Future
Credit scoring should be trustless and globally accessible. We believe it is a public good. Spectral builds upon Ethereum’s innovations and sets out to achieve the same goal for programmable creditworthiness and reputation that Ethereum did for programmable money. Together, we are building a decentralized, openly accessible risk infrastructure for a myriad of applications and protocols across the DeFi and GameFi ecosystems to enable a slew of new use cases for programmable creditworthiness. As a community of developers, data scientists, and end users, we are working toward a more equitable, capital-efficient DeFi ecosystem capable of ushering in all of the changes that Web3 promises.
Verifiable and Privacy-Preserving Credit Journey
At Spectral, we care deeply about user privacy and have chosen a path forward that can help safeguard it. We believe users should be able to opt-in to credit scoring when they need it and have a score generated whenever they need one based on their on-chain activity. Doing so in the form of an ERC-721 creates a composable reputation primitive that can be used for various decentralized applications.
A high priority for future builds is developing an effective verifiable computation method. Besides securing the decentralized credit risk network, developing zero-knowledge proofs and other methods would help safeguard user data while proving the integrity and correctness of the MACRO Score's computation.
Spectral is building a decentralized, publicly accessible risk infrastructure for various applications and protocols across the DeFi and GameFi ecosystems. Financial reputation-based primitives and other forthcoming projects will also enable powerful new use cases in programmable creditworthiness and beyond.
Financial reputation primitives open up new categories of dApps: use cases being considered by developers include collective creditworthiness, DAO-based credit ratings, credit default swaps, credit delegation, and permissionless tranched debt.
If you have an idea for building a dApp using an Ethereum-based financial reputation primitive, please fill out the following form for early access to our APIs and smart contracts or reach out directly in the #integrations channel of our Discord server.
Decentralized Credit-Risk Network
The first step toward decentralization at Spectral is the creation and incentivization of our Scoracle network, a network of data scientists and modelers working with publicly accessible information to create and perfect the MACRO Score and other soon-to-be-released features.
Democratizing credit risk requires a transparent approach to modeling. The Scoracle network, a crowd-sourced machine learning network (CSML) will be open to all scorers who meet certain performance benchmarks and are willing to compete to make the most accurate scoring model. This network will aggregate the models into a single Score. Incentivizing this system requires concealing scores during the modeling process to avoid frontrunning and a proof of integrity guarantee to ensure models don’t maliciously poison the aggregate model.
Join Our Community
To build the future of creditworthiness infrastructure, we need input from the community. Our user research team would love to get in touch with you and hear your feedback or suggestions for new features. Answer our product survey here. There will also be roundtables and community discussions soon to improve the product experience.
We are particularly interested in connecting with fellow data scientists eager to learn more about crowd-sourced machine learning (CSML). Help us build a decentralized credit risk network and connect to find out more.
We are looking for an experienced Product Manager to join our team. If you are interested in discovering more, you can learn more and apply here.
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