Uncollateralized lending within crypto is growing rapidly — with billions in loans extended purely on-chain, and a multiple of this being extended by crypto native lenders. Our partner, Maple, has originated over $1.4BN in loans in a year, with various new applications emerging to access capital efficiently for borrowers and offer sustainable yields for lenders. The space is still growing and Credora is building solutions to help both borrowers and lenders in building the future of credit lending.
Volatility in crypto is not new, but the demise of Terra Luna was a shock to the ecosystem. It is in these times of stress that lenders in crypto urgently need to know the liquidity and creditworthiness of borrowers.
Credora’s technology performs real-time, privacy-preserving risk computations, creating a foundation for lending confidently across the crypto ecosystem by being a neutral arbitrator of risk. Credora takes encrypted information from all the venues where a borrower has exposure, and computes it without needing to see the underlying sensitive data. Cryptographic proofs validate the computations and ensure privacy of data. The architecture seamlessly ingests data from the majority of large CeFi exchanges (our coverage currently accounts for 85% of CeFi volumes), while covering DeFi and staking activity from 12 EVM compatible chains and Solana.
What does this mean for Lenders?
The conventional method of evaluating credit in crypto is to analyze static data, like financial statements or balance sheets. While these are important, they represent the financial health of a company at a particular moment in time. They tend to not follow a standard format, or can sometimes lack detail, especially in crypto. The statements are usually internally prepared financials, which can dampen the confidence in their accuracy.
With Credora, lenders can use real-time metrics in the credit evaluation, and pool managers can feel more confident when the market is panicking since they can quickly validate the liquidity of the borrowers and assess any potential exposure.
Historically, the only way to validate the creditworthiness of borrowers was to recall loans, which carries a cost. Lenders can now rely on their risk monitoring to manage their portfolio, allowing them to keep loans active, and even expand their lending book for certain borrowers.
LPs for our pool on Maple can have confidence that Credora’s borrowers have gone through a thorough static financial assessment, and many are monitored and validated in real-time.
What does this mean for Borrowers?
Borrowers also benefit from the technology by being able to prove their creditworthiness, all while keeping their sensitive information private. The net effects we see are larger lines of credit, and access to better borrowing terms. Access to efficient and competitive lending boosts a borrower’s bottom line and allows them to focus on their business. Additionally, the transparency between borrower and lender ensures that in times of stress, liquidity is not drained from the system and borrowers can still access capital at times when they need it most.
Recent Market Volatility and Risk Events
During the latest move in the market, we tracked real-time balances and risk metrics of some sample borrowers as the price of UST tanked. [The data has been anonymized and adjusted to preserve the privacy of the clients, and the sample below is for illustrative purposes only]
Lenders can immediately get reassurances around liquidity and make data-driven decisions to target the most creditworthy borrowers, while other lenders may be pulling funds back.
Credora on Maple
The Credora Pool on Maple is the first public credit pool on Maple Solana, and thorough static and real-time evaluation drives one of the most impressive and sustainable risk-adjusted returns. The pool currently delivers a 7% yield with a much more diversified and actively risk-managed exposure. Comparative rates in the Solana ecosystem are outlined below:
The Future of Credit Markets in Crypto
Credora believes this technology will help lay the foundation for a standardized and secure transfer of credit evaluation to help guide the future of credit in crypto.
We’re committed to bringing sustainable, transparent, and scalable yields to DeFi. Our collaboration with Maple is a big part of making that happen. Feel free to reach out if you’re interested in being an LP and want more information, or if you’re an institutional borrower that wants a more capital-efficient borrowing source.
Links:
Maple | Solana
Credora
