2020-12-12 15:09 |
The DeFi sector has exploded in 2020, and in a few short months, the decentralized finance sector has come up with a variety of new products. The latest such product came from a company called Wing Finance, which created a credit score-based lending platform.
A new system for borrowing money based on credit scoreOriginally, the idea of launching the DeFi lending platform was to allow anyone to take out a loan, provided that they offer collateral. However, since the blockchain industry is all about transparency and security, it is fair to lenders to know who exactly is borrowing their funds.
This is why Wing Finance teamed up with another project, Ontology (ONT), to launch a first-ever credit score-based lending platform, called Inclusive Pool.
A giant step forward for not just @Wing_Finance, but #blockchain as an industry. This is the 1st application to adopt #OScore, which can lower the collateral requirements and interest scores. This will hopefully increase further adoption of #credit-based lending in #DeFi! https://t.co/TRWhTiYTzt
— Li Jun (@LiJun_Ontology) December 9, 2020The system was actually built on Ontology’s DeID, and it uses technology from OScore to provide users with accurate insight into borrower’s credit score in real-time. This way, transparency is increased between collaborating parties, and lenders can choose whether or not they trust the borrower enough to lend them money.
Details about the systemAccording to Wing Finance’s Medium announcement, the system will allow users with an impeccable score to maximize their borrowing capabilities and undercollateralize assets.
The Pool will work by including a supply pool, a borrow pool, and an insurance pool. Lending collateral for all three pools will be comprised of the three top-ranking stablecoins — USDT, USDC, and DAI.
Of course, there will be some rules involved. For example, there will be a $500,000 limit for the project’s supply pool. Meanwhile, the maximum amount that can be borrowed will be $1,000. Users will be able to take only one loan per day, and they will have to provide collateral every time they take a loan.
The loan-to-value ratio — or how much collateral users have to provide for the loan — will be determined by their DeFi credit rating (OScore). The higher the score, the better the ratio, and vice versa. The score will also impact the interest rates that borrowers will have to pay.
Lastly, it is worth mentioning that liquidity providers and borrowers will be further incentivized through WING token distributions in the Inclusive Pool. Suppliers are said to receive 40% of the token allocation, while the rest will go to insurance and borrow pools.
The post Ontology (ONT) teams up with Wing Finance for a new DeFi product appeared first on Invezz.
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