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The P2P lending protocol uses on-chain data, machine learning, and decentralized identity information to calculate a non-fungible credit score for potential borrowers.
Peer-to-Peer Lending Protocol (P2P) RociFi Labs has completed a $2.7 million seed funding round involving Arrington Capital, Goldentree, Nexo, LD Capital and Skynet Trading.
The anonymous nature of crypto means that DeFi lending protocols typically use over-collateralized loans, in which, for example, a borrower posts $150 collateral for a $100 loan. The setting is closer to a pawnshop than a traditional bank. Instead, RociFi will offer loans with zero or undercollateral, using the borrower’s established DeFi presence to help lenders assess creditworthiness.
The capital will be used to expand the RociFi team and bring the product to market, with a full launch expected in the second quarter.
“The most important thing is the ability to connect the protocol to the main network, but do it in a secure way,” RociFi Labs CEO Christopher Brookins told CoinDesk. “We are devoting appropriate resources to make sure we don’t just launch a new protocol as quickly as possible, which requires capital.”
How does it work
The RociFi protocol uses data on the network, machine learning, and decentralized identity data points, including Twitter and GitHub accounts, decentralized autonomous organization (DAO) participation, and non-fungible token (NFT) ownership.
RociFi relies on decentralized identity providers that use technologies such as zero-knowledge proofs to share only relevant user information.
Borrowers are assigned a non-fungible credit score (NFCS) ranging from 1 to 10, where lower scores represent less risk. Users can burn the non-transferable NFCS token and associated addresses at any time if they are concerned about privacy or no longer want to use it.
“Undercollateralized capital markets represent one of the biggest opportunities to transform the performance of capital into crypto,” Arrington Capital partner Ninor Mansor said in a press release. “The distinct absence of non-economic safeguards in DeFi means that borrowers cannot use other types of ‘social capital’. RociFi is a game changer by introducing the idea of online credit scoring as well as NFT-based identity.”
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