In the last post we introduced a new term, metazen, which will become the de facto citizenship for Web3 users.

In this post we illustrate how RociFi’s non-fungible credit score (NFCS) enables metazenship which will drive responsible lending and behavior among users of the system through a mechanism called social recourse.

Lastly, we’ll examine the benefits for users and DAOs by implementing it into their ecosystems with the end goal of creating a more vibrant and safer Web3 for everyone.

How users manage the RociFi protocol

At its core, RociFi credit is user-issued money which is the first attempt of its kind in history at a global scale rather than a local village level. This introduces its own complexities in how to manage a digital commons like the RociFi protocol.

We believe the best way to do this is by approaching Web3 like a ‘global village’ where stakeholders are shared ‘property owners’ of the RociFi ecosystem (shown below).

These stakeholders work together to maintain an equilibrium of credit and social checks in the ecosystem to ensure it is functioning properly.

How RociFi improves on social and credit checks

An example of a social check in today’s marketplace is an AirBnB vendor who typically analyzes an applicant’s reviews and rating along with their Facebook or Instagram profiles before renting their property to them.

The property owner will pool all this data together to reach a discretionary decision on whether to loan their property to the applicant. This process has the potential to introduce bias by “judging a book by its cover”.

However, social checks are also immeasurably valuable to renters and rentees and both benefit if the reputation, reviews and ratings provided are trusted and verified.

Today’s credit checks by retail banks or legacy ratings agencies favor one type of collateral — property — and one repayment metric — current debt. Both these metrics are shortsighted, biased and outdated, and have led to asset bubbles in global markets especially housing. Failing to consider other elements of creditworthiness leaves many good borrowers out of the system, such as the self-employed.

RociFi’s design streamlines and automates both social and credit checks by the community for responsible lending while avoiding discretionary biases; all of which helps mitigate loan defaults.

We refer to this mechanism as ***social recourse ***which can be likened to rewarding or removing actors from the global village based upon their actions towards the common good. At its core, social recourse is designed to incentivize positive, cooperative behavior while strongly disincentivizing negative ones such as loan defaults.

RociFi’s Social Recourse process

Upon being eligible for an under-collateralized loan, the user must agree to the terms and conditions that include exposure of their opted information.

Building reputation in Web3

Going back to the global village analogy, how do users build reputations in Web3?

Over the decades, village co-op-style banking has proven remarkably resilient with fewer defaults and overindebtedness partly because people know each other and effectively lend at more personalized rates. In this setting, the baker and the farmer earn their reputation over years of hard work supplying food, and, if they defaulted, their reputation would be severely damaged as word would quickly spread.

This is a form of social recourse.

RociFi is building the same dynamic in Web3 whereby lending pools operate as the village bank and NFCS operates as word of mouth reputation and credit score.

So, how does one build a reputation as a metazen in RociFi’s village?

Some possible steps:

1. DAO Participation

   Active DAO participation including proposals, voting, or paid contributions can positively affect a user’s credit and reputation score. However, one should expect quality to outweigh quantity, e.g. governance proposals accepted vs volume of proposals offered.

2. MOOCs

   Earn as you learn. Similar to your University degree or MOOCs like Coursera and EdX, users who upskill on Web3 will earn certificates and points using Rabbithole, Gitcoin, and Galaxy.

3. Art, media, social media

   Artists and authors can earn through creation of quality work measured either by audience interaction and tips or in the case of NFTs its market value. Similarly, a large, reputable following on Twitter is a reliable reputational data point.

4. Builders

   Just as a property developer will gain or lose reputation based on their last project so too can Web3 developers based on project growth, Github or Gitcoin contributions. There is no social capital more valuable than building a vibrant project or community given its benefit to Web3 coupled with the reputational capital lost in the event of default.

   RociFi x Metazen reputation benefits

   The following diagram explains how the NFCS contributes to building a reputable metazen’s profile with verified data from DeFi and DAO participation.

• ‘Jane’ requests loan from Roci Protocol via her MetaMask wallet

• Roci mints NFCS based on Jane’s MetaMask transactions in DeFi and other Web3 Dapps

• NFCS carries out credit and social checks on Jane’s MetaMask and Web3 profile

• The NFCS contributes as verified badge of Jane’s decentralized ID (metazenship) hosted on a DID protocol such as BrightID or SelfID

• If Jane’s NFCS is of high quality the value flows back to her MetaMask wallet via lower borrowing rates in DeFi, more lending opportunities and higher reputation in DAO governance

  NFCS x DAO governance benefits

  The recent Beanstalk hack is a case in point where the NFCS could have been used as an extra credit check measure and possibly prevented the hack.

  In this case, hackers took out a flash loan to buy the governance coins of the DeFi platform Beanstalk, then submitted and approved a DAO proposal on Beanstalk that waived the loan repayment. They walked away with the loan worth ~ $180m.

In theory, the NFCS verification could have been a prerequisite for any Beanstalk contributor to make a DAO proposal. The community could have automatically rejected the proposal given the proposer would not have had an NFCS, as all suspected fraudulent addresses are not permitted to generate an NFCS via RociFi.

On the Mainnet Roadmap

Part of the Roci Roadmap is to make NFCS badges visible on Cyberconnect as an extra tick to verify that a wallet address is a reputable borrower and metazen.

Cyberconnect is building open social graphs for developers to build Dapps on.

For borrowers of unsecured loans, it will be mandatory to have their NFCS score ‘badges’ on Cyberconnect.

This way, borrowers’ score and subsequent repayment behavior becomes a trust data point in their public on-chain identity and social graph on Cyberconnect.

Conclusion

RociFi is taking a community-first approach to solving two problems within crypto — native under-collateralized lending and Sybil resistance.

The NFCS is the first step in building a metazen profile for Web3 users that will enable greater interactions and services by being the verified data point for credit, reputation, and trust across Web3. Furthermore, metazenship enables a first of its kind mechanism — social recourse — that allows users to govern and incentivize themselves for the common good of DeFi.

As metazenship blossoms, greater integration of NFCS by DAOs will drive utility beyond under-collateralized lending while making overall Web3 safer from bad actors.

RociFi is the Layer 1 for a permissionless web3.0 credit economy.

Follow us on Twitter: https://twitter.com/rocifi

Join our Discord: http://discord.gg/tGgKkSqHZz

Join us on Telegram: http://t.me/RociFi

Read our Mirror: https://mirror.xyz/rocifi.eth

RociFi has developed a protocol that leverages on-chain data, machine learning and decentralized identity data points to facilitate under-collateralized loans via the blockchain. This protocol is set to revolutionize lending for those whose digital identities are increasingly centered on the semi-autonomous Web 3.0. RociFi’s scoring process will identify a borrower’s trustworthiness based on their digital identity and allow lenders to lend their money according to their credit risk scores.

“The promise of RociFi is to create an open financial system that allows anyone, anywhere to use their established DeFi presence to access capital,” said Christopher Brookins, CEO of RociFi Labs. “Our evolving system will prove that Web 3.0 can better facilitate capital access compared to traditional financial systems.”

“Under-collateralized capital markets represent one of the biggest opportunities to transform capital efficiency in crypto,” said Ninor Mansor, Partner at Arrington Capital. “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.”

The seed funds will be used to expand the RociFi Labs team and take the product to market, taking advantage of the growing interest in decentralized finance from the traditional finance industry. The newly acquired funds will increase the size of the engineering team and launch the protocol.

RociFi is currently available on Kovan testnet and anticipates a phased, full-scale launch to mainnet by quarter two of this year, running as a fully decentralized, permissionless entity. Individuals who want to try out the testnet can sign up for an account here.

RociFi is the Layer 1 for a permissionless web3.0 credit economy.

Follow us on Twitter: https://twitter.com/rocifi

Join our Discord: http://discord.gg/tGgKkSqHZz

Join us on Telegram: http://t.me/RociFi

Read our Mirror: https://mirror.xyz/rocifi.eth

RociFi is building decentralized credit economy with transferable, blockchain-native credit scores designed to facilitate zero and under-collateralized lending. At its core, the protocol leverages machine learning algorithms for scoring on-chain data and decentralised identity data points to effectively facilitate under-collateralized loans via the blockchain.

Read more about RociFi’s vision statement here.

This release demonstrates core functionality of the future RociFi product on Ethereum blockchain. For the testing purposes, the release is done on Kovan Testnet where users can lend and borrow test tokens.

The key functionalities of the release

• Connect wallet in Chrome, Brave or Firefox desktop browsers via Metamask and mint your personal Non-Fungible Credit Score (NFCS) for the bundle of connected addresses. NFCS is minted on Kovan

• Mint NFCS token preferably for the wallet that has good balance and history of DeFi activity (borrowing, liquidity provision, DEX trading) on the Mainnets of EVM-compatible chains: Ethereum Mainnet, Avalanche, Moonriver, Polygon, Arbitrum, BSC, Fantom, Optimism

• Generate your personal credit score for your NFCS. RociFi Credit Scores are from 1 to 10, where 1–6 — are the best scores that would give access to the undercollateralized lending. Read here more on RociFi’s scoring terminology

• Deposit to various risk-based testDAI, testUSDC and testUSDT pools and earn interest on your stablecoins

• Borrow stablecoins against your testETH and testWBTC with the rates that depend on your score. Take 2–3 loans of different configurations and track their performance over time

• Withdraw your lending position anytime and cash out interest earnings

• Do repayment of your loans

• Review the actual status of your lending and borrowing positions via Dashboard

• Manage collateral holdings on the platform

• As a test, you can also miss repayment of the loan and try the experience

Set up

1. First of all, configure your wallet to connect to Kovan test network:

1.1 If you don’t see test networks in the list, click “Show/hide”

and enable “Show test networks”.

2. Ensure that there are testUSDC, testUSDT, testDAI coins in your wallet for deposit and testETH, testBTC for collateral and borrowing. Get them via Kovan faucet here: https://roci-testnet-faucet.netlify.app/

3. Enable showing these custom tokens in Metamask. 3.1 Read Instructions. https://metamask.zendesk.com/hc/en-us/articles/360015489031-How-to-add-unlisted-tokens-custom-tokens-in-MetaMask (“How to add a custom token”)

3.2 Add these contract addresses in the Import token field:

• NFCS (RCT) Token: 0xFCbC5c9E4256887eC4e02dc05D845b8F6370589B. Decimals: 1

• testETH: 0xbFBd09C03Eddfd8E3b7b3FdfB65DCd1B95B96A1A. Decimals: 18

• testWBTC: 0x8258aA6ad716800502212e1d3A399693E05acB4A. Decimals: 18

• testDAI: 0xd2b5784b7f0ff40c010638177744588d33a1f929. Decimals: 18

• testUSDT: 0x5E6d1d6cd912bdB47B821358299e5215648F4318. Decimals: 18

• testUSDC: 0xC2D2AD1C133C5f9b5c4388Fb0082c4c3777fB3AF. Decimals: 18

  4. IMPORTANT! You also need to get ETH (not the same as testETH!) for paying transactions on Kovan. Get them here: https://faucets.chain.link/kovan

Video instructions

If you have any trouble figuring out the process, we’ve put together this walkthrough video as well: https://www.loom.com/share/73433aeeb1f6460dacd64d712ef9c876

Support and Help FAQ

1. Borrow operation has failed. What to do?

• Most likely the reason is that Chainlink oracle that RociFi is using has run out of LINK. You can help the whole community to unblock Borrow flow by doing following steps:

• Check balance of Chainlink oracle here: https://kovan.etherscan.io/address/0xfbbbddbb2b53e50400c0339474323f8b2a3e6939.

• If it is low, connect your wallet and mint it here: https://faucets.chain.link/kovan (select ‘LINK’)

• Then send minted LINK from your Kovan wallet to 0xfbbbddbb2b53e50400c0339474323f8b2a3e6939

  Thank you! 🙏

2. I wanted to get test tokens (testDAI, testUSDC etc) but faucet does not work. What to do?

• Most likely the reason is that faucet has run out of ETH to pay for transaction costs. Help the community to fix the faucet by doing the following steps:

• Mint ETH on Kovan here: https://faucets.chain.link/kovan (select ‘ETH’)

• Send minted ETH to 0x42446E8d0873dCb7c5DDf649DBEEa6538b8F9f05

  Thanks! 😍

  3.If you have any issues or questions regarding Testnet usage, please reach out for help in RociFi Discord.

Feedback

We are very much looking to receiving your feedback!

It’d be great if you would sum up your feedback, impressions about the product and wishes about the improvements and let us know in the Feedback channel in RociFi Discord: discord.gg/tGgKkSqHZz.

Known limitations and issues

• Accessing Application from Ledger wallets is not supported

• ETH Collateral price is hardcoded and set to 2700 USD

• Only desktop experience — using application on mobile is disabled

• LTVs and APRs values are ‘dummy’. They will be different in the final mainnet product

• Only full loan repayment and full withdrawal are possible

• By default, repayment does not do collateral withdrawal; collateral withdrawal needs to be done explicitly via “Collateral” tab

• During the liquidation of the overcollateralized loans, part of the ‘excessive’ collateral that is higher than LTV=100%, will not be returned to the borrower

Testnet Instructions in Chinese

有关中文说明，请参见此处：https://mirror.xyz/0xbEE3C272ad4215cb352291af334dDC014BB3c20b/lO2AtgnMI-Bmw-57o2ll6zxs_mb57bxwAzmAZdjGUMg

RociFi is the Layer 1 for a permissionless, multi-chain web3.0 credit economy.

• Follow us on Twitter: https://twitter.com/rocifi

• Join our Discord: http://discord.gg/tGgKkSqHZz

• Join us on Telegram: http://t.me/RociFi

• Read our Blog: blog.roci.fi

A well-known issue in DeFi is the proliferation of fraudulent actors, i.e. hackers, phishers, scammers, and many more. These exploits cost users and protocols millions of dollars every year and continue to grow in size and scope.

One driver is that DeFi runs on over-collateralized loans, which presents zero default risk. Accordingly, no incentive exists to identify and firewall bad actors.

RociFi is a permissionless under-collateralized lending protocol, which makes it a likely target for fraud. In order to mitigate this, we have developed analytics to proactively identify and block fraudulent addresses from the RociFi ecosystem.

The above has a practical application in minimizing loan defaults. It also has a strategic application in bootstrapping a DeFi-wide initiative of self-policing, i.e. removing fraudulent actors.

This initiative is similar to the real-world where if a borrower defaults on a loan, their history isn’t contained to the defaulted lender. The defaulters' information is disseminated system-wide, creating a firewall that removes them from accessing services in the future.

Creating the future of DeFi

In order for DeFi to reach its full potential, the industry must make a concerted effort to mitigate fraud.

RociFi is contributing in two ways:

Multi-chain Credit and Reputation Score

RociFi will integrate its nonfungible credit scores (NFCS) into decentralized identity (DID) providers and social graph protocols so web3.0 users can prove credit and reputation across multiple chains. This accomplishes two things:

1. Establishes multi-chain proof of credit and reputation

2. Lays the foundation for social recourse

For example, an NFCS with a default shown on a user profile and linked to a DID, e.g. ENS or NFT, creates a web3.0 firewall, i.e. social recourse. Social recourse incentivizes good behavior.

RociFi Fraud Classifier

RociFi will provide its fraud analytics to the public via a free dashboard. DeFi users can now check the fraud risk of addresses and contracts before interacting with them. This shortcut is especially helpful to non-technical users who cannot read code.

The thomasg.eth story is a perfect example of how RociFi Fraud Classifier could have been a quick “smell test” on the nefarious addresses and contracts without needing to read the code.

Another example, in our CEO’s most recent Forbes article, he used RociFi Fraud Classifier to tag three anonymous addresses as high fraud risk (fraud scores of 10), originating from a known phishing address that made a 1.96 ETH donation to Ukraine's ERC20 account.

According to the analysis done with the RociFi Fraud Classifier tool these three addresses affiliated with a known phishing scam are classified as high fraud risk. Conclusion RociFi's efforts will galvanize the DeFi space into squeezing fraudulent actors out of crypto, laying the foundation for higher level objectives like a permissionless, credit economy designed to support web3.0.

RociFi intends to spearhead this initiative by being the first protocol to issue permissionless under-collateralized loans and provide a free dashboard for DeFi users to check the fraud risk of addresses or contracts before interacting with them.

RociFi is building the Layer 1 for a permissionless, multi-chain web3.0 credit economy.

Keynes argued that public debt and deficits should be run during wartime, i.e. ‘the war chest’ but when your currency isn’t an international reserve currency this can prove very difficult and costly. 

So, what are the options for a country entering wartime while running a current account deficit of USD 547 million, and most of its national debt is external, meaning its bonds are issued and priced in USD? 

This means the country suffers a double-whammy in a situation such as this as the exchange rate against the USD plummets. There are just two options: 

A. it needs to issue bonds to raise money to fight the war and rebuild after the invasion, likely in the tens of billions 

B. seek international aid from institutions like the IMF

Ukraine's 10-year bond is around 15.615% yield, it’s 1-year bond is around 32%, and inflation in the country is running close to 8%. This is an unfavourable environment to issue bonds in as everyone runs to the USD as a safe haven currency. 

Not only that but bonds are becoming less favourable as the Great Bond Rally for the past twenty years looks like it’s over as interest rates around the world have hit the lower bound and yields start to trend up, pushing bond prices down. 

The second option is international aid. However, this is often a poisoned chalice (see Jamaica’s ‘Life and Debt’ situation with the IMF) and the institution that usually deals in such relief, the IMF, issues aid denominated in own unit, the SDR, a basket of currencies heavily weighted towards safe havens like USD, EUR and JPY, so it’s value could rise over the term of the loan and often leads to years of austerity in the debtor country. 

Currently, 1 SDR =1.394860 USD

Governments in DeFi

The architecture for institutional grade decentralised finance is being built and just as there is potential for alternatives to the SWIFT network, so are there alternatives for raising funds from a global and decentralised pool of lenders. 

RociFi has built a decentralised credit assessment engine for Web3 which is built not just on the quality of the assets in one’s wallet, but also on the quality of on-chain behaviour. Analysing transaction behaviour and integrating with decentralised identity (DID) providers, RociFi assesses a user’s (pseudonymously) credit risk and can for instance blacklist nefarious actors. 

What would it look like if Ukraine were to tap into DeFi credit markets?

Now, let's run a thought experiment, assuming the Ukrainian government had already integrated their wallets into DeFi protocols to borrow and lend previously. As a top tier borrower, it could borrow stable coins at 8-12% per year with 0 collateral on RociFi, far below the 32% it costs the country to borrow issuing it’s 1-year bond.

Or, assuming that given the turmoil their credit risk has increased, which is likely, Ukraine could still use the assets in their DeFi wallet as collateral to borrow stable coins beneath their current 32% yield.

The balance of trade between countries has become so skewed over the years that most countries run constant deficits against a couple of countries, namely China and Germany, which run massive surpluses.  

RociFi doesn’t take account of the balance of trade.  

A DeFi-native government could borrow and leverage their cryptocurrency, even without putting down collateral just like some of the overnight interbank loans in traditional markets. 

What if it also digitised and collateralised some of its balance sheet and reserve assets, such as USD and gold to further their access to peer-to-peer international decentralised markets?

Conclusion

These are just some of the possibilities that alternative, decentralised lending protocols like RociFi offer to governments in worst case scenarios. Regardless, the one thing that everyone on all sides desires, is a fast end to the violence and loss of human life. 

** RociFi is building the Layer 1 for a permissionless, multi-chain web3.0 credit economy.**

If DeFi is to reach its full potential, borrowers must have access to credit without locking excessive amounts of capital.

This problem is well articulated in an article by Bankless, where the $36B locked in DeFi lending protocols is a symptom of the current pawn shop market rather than financial innovation supplanting TradFi.

RociFi

RociFi is solving the aforementioned limitation by combining DeFi and Web3.0 into a Web3.0 lending ecosystem.

We believe that Web3.0 lending will be enabled by three key components, interconnected in the multi-chain future.

Decentralised Identity

Cryptographic technologies allow users to own their username, profile data, and accounts across multiple services akin to how Open Banking directives like PSD2 enabled an avalanche of fintech innovations on top of the existing banking infrastructure.

Also, technologies like Zk-proofs allow users to share encrypted personal data with lenders for reputation scoring without sharing too much information, both on-chain and off-chain.

Through decentralized identity (DID) providers, RociFi’s reputation scoring system connects (with consent of the user) identity datapoints such as Twitter and Github accounts, DAO participation, NFT ownership, and more.

Through the aforementioned process, borrowers can prove ownership of DIDs that have a higher value than the requested under-collateralized loan.

Non-custodial wallets are the bank accounts of the future

There are over 700M transactions recorded on Ethereum mainnet during 2020 and 2021. There are more than 3M transactions happening on Polygon daily and nearly 1M on Avalanche. There are more than 20M monthly active users of Metamask alone, which is comparable to the user base of the leading banks in Europe and the US, respectively.

Given the above, there is an immense set of DeFi transaction data that can be utilized to understand one's creditworthiness; even on a pseudo-anonymous basis.

RociFi’s credit scoring system (CRS) analyses borrower’s historical behavior across multiple chains, generating a non-fungible credit score (NFCS). The NFCS rating scale is 1 to 10, with 1 being the lowest credit risk and 10 being the highest.

NFCSs are non-transferable ERC-721 tokens that users own and connect when requesting a loan. Users are able to burn the token and addresses associated with it at any time.

As NFCS usage becomes ubiquitous, the cost-benefit of defaulting on RociFi loans will quickly turn negative as defaulter wallets are tagged and restricted from RociFi permanently, making the NFCS akin to the Web 3.0 FICO score or “proof of credit.”

Blockchain-native enforcement

In traditional finance, lenders collect and verify users’ personal data in order to enforce the loan contract with punishment in the case of defaults. In Web3.0, where people operate with online identities, the aforementioned is not possible.

However, DIDs offer “social recourse” by damaging a user’s public reputation and associated communities and tokens, e.g. NFT collections or DAO tokens, in the event of a default. In the event of non-repayment, a borrower’s DID and associated addresses will be doxxed publicly.

A great example of the effectiveness of social recourse is a tweet by the co-founder of Manifold where he explains that he turned down a $9.5 million offer for his Crypto Punk NFT because he views his Punk as “his identity and brand and what I’m building in the NFT space will be way more valuable in the long run.”

The above sentiment is widely shared by participants in these communities and will help reinforce good behavior given the monetary ripple effects of bad actors. For example, if any fraction of Crypto Punk holders default on RociFi loans, the monetary value of the entire collection will be negatively affected.

This is why RociFi was created: to enable a massive shift to lending on Web3.0 utilising non-custodial banking, decentralized identity, on-chain reputation and blockchain-native risk management.

Follow RociFi on Twitter: https://twitter.com/rocifi

Join our Discord: https://discord.gg/dq7cDETKxd