Peer-to-peer (P2P) lending protocol RociFi Labs has completed a $2.7 million seed funding round that included the participation of Arrington Capital, Goldentree, Nexo, LD Capital and Skynet Trading.
DeFi lending protocols often use overcollateralized loans because crypto is anonymous. A borrower may put up $150 collateral to get a $100 loan. This setup is more like a pawnshop rather than a bank. RociFi will instead offer zero- to undercollateralized loans by using a borrower’s established DeFi presence to help lenders judge creditworthiness.
This capital will be used by RociFi to grow its team and bring the product to the market. The full launch of the product is expected to occur in the second half.
How it works
The RociFi protocol uses on-chain data and machine learning to leverage decentralized identity points such as Twitter and GitHub accounts, participation in decentralized autonomous organizations (DAOs) and ownership of non-fungible tokens (NFT). RociFi is based on decentralized identity providers who use technology like zero-knowledge proofs to only share relevant user information.
A non-fungible credit rating (NFCS) is assigned to all borrowers. Higher scores are associated with greater risk. Users can burn the nontransferrable NFCS token and associated addresses at any time if they’re concerned about privacy or no longer want to use it.
“Undercollateralized capital markets represent one of the biggest opportunities to transform capital efficiency in crypto,” said Arrington Capital Partner Ninor Mansor in a press release. “The distinct lack of non-economic recourse in DeFi means other types of social capital cannot be deployed by borrowers. RociFi changes the game, introducing the idea of on-chain credit scoring as well as NFT-based identity.”