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On-Chain Credit Risk Score (OCCR Score) in DeFi

Author

Listed:
  • Rik Ghosh

    (Chainrisk)

  • Arka Datta

    (Chainrisk)

  • Vidhi Aggarwal

    (Chainrisk)

  • Sudipan Sinha

    (Chainrisk)

  • Abhimanyu Nag

    (Chainrisk)

Abstract

Decentralized Finance (DeFi) and smart contracts are the next generation and fast-growing market for quick and safe interaction between lenders and borrowers. However for maintaining a streamline ecosystem it is necessary to understand the risk associated with the particular user under consideration. In this paper we have developed 'On Chain Credit Risk Score' of a wallet is an answer to quantifying the risk of the particular wallet, namely the probability that the particular wallet may have a loan liquidated. 'On Chain Credit Risk Score (OCCR Score)' of wallets, will help lending borrowing protocols and other DeFi institutes to understand the risk involved in giving out loans to a wallet and may change the Loan-to-Value (LTV) Ratio and subsequently the Liquidation Threshold (LT) if required.

Suggested Citation

  • Rik Ghosh & Arka Datta & Vidhi Aggarwal & Sudipan Sinha & Abhimanyu Nag, 2024. "On-Chain Credit Risk Score (OCCR Score) in DeFi," Papers 2412.00710, arXiv.org.
    • Handle: RePEc:arx:papers:2412.00710
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    File URL: http://arxiv.org/pdf/2412.00710
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