TransUnion, the global credit bureau, is making waves in the DeFi and Web3 space with its off-chain credit scoring service which will enable DeFi (Decentralised Finance) lenders access to its off-chain credit scores.
In partnership with Spring Labs and Quadrata, TransUnion's pioneering service will permit lenders to access credit reports while preserving the consumer's identity privacy on the blockchain.
By combining TransUnion's credit score data with Quadrata's digital passport network, a new group of customers in the Web3 space will have access to lending opportunities that were previously unfathomable in the Web3 space.
We’re bringing @TransUnion’s credit data on-chain via the ky0x Digital Passport to help accelerate #DeFi's adoption.Read more at: https://t.co/gKNAFIIUkU
— ky0x by Spring Labs (@Ky0xProject) January 12, 2022
“Essential tool”
TransUnion executive vice president financial services Jason Laky said: "Credit scoring is an essential tool for lenders to help mitigate risk regardless of the platform being used,"
"This partnership with Spring Labs and Quadrata will enable DeFi lenders to access this critical information when making their lending decisions with confidence, thereby reducing their risk and providing borrowers with more opportunities for better terms."
How it works
DeFi applications will receive off-chain credit data via Spring Labs technology and Quadrata, a digital passport network that spun out of Spring Labs.
The credit score will be provided directly to the consumer from TransUnion via Spring Labs technology, with excerpt information subsequently shared by the user with the DApp.
Spring Labs CEO John Sun emphasised the importance of striking a balance between the information that lenders require to assess risk and the privacy and anonymity expected by users of the technology.
"This new product, featuring TransUnion's identity and credit data at its core, is a significant step toward achieving that balance and allowing more lending opportunities on the blockchain while minimizing risk," Sun said.
DeFi – crypto’s wild west
The DeFi systems allow for financial products to become available on a public, decentralised blockchain network avoiding intermediaries such as banks or brokerages.
These markets are considered the wild west of the crypto world, where lack of regulation and promise of higher returns have attracted a mixed bag of traders.
However, Transunion's new foray into the DeFi space legitimises and accelerates the development of this revolutionary ecosystem into a wider audience.