Built on SxT: Lendvest
Built on SxT is a customer-authored blog series that showcases the many use cases across Web3 that are being built on top of Space and Time. This blog post was authored by the team at Lendvest to highlight how Space and Time is a critical part of their stack.
Decentralized Finance (DeFi) has transformed the financial landscape, offering users unprecedented access to fair and transparent lending and borrowing. However, unlocking the full potential of DeFi requires innovative solutions to incorporate off-chain compute in a way that doesn’t break the zero-trust model of blockchain. Lendvest, an on-chain credit score provider, has partnered with Space and Time to integrate Proof of SQL, a revolutionary cryptographic technology into their protocol. Proof of SQL allows Lendvest to leverage tamperproof off-chain compute in calculating on-chain credit scores for DeFi.
Integrating Proof of SQL
With Proof of SQL, Lendvest is able to pair a wallet address with verified loan history to form a user's credit score. The wallet and on-chain lending data is ingested using Space and Time’s decentralized data network, and a digest is produced to ensure that any changes to the data are tracked before entering the data warehouse. Then, all calculations and SQL operations to form Lendvest’s credit score are encompassed in a ZK proof computed by Space and Time. The resulting end-to-end verifiable proof is verified by Space and Time’s gateway and the result is sent to Chainlink to then be broadcasted on-chain.
Revolutionizing DeFi Lending
Instead of doing all the calculations or verifying a large amount of data, a DeFi lending protocol only needs to verify the hash to recognize the valid Space and Time Proof of SQL proof. Lendvest’s Proof of SQL integration provides several benefits to the DeFi ecosystem:
1. Enhanced Capital Efficiency
With the integration of Proof of SQL, DeFi lending protocols can verify the hash of the Proof of SQL proof, streamlining the verification process. This significantly reduces the computational burden on protocols, leading to enhanced capital efficiency and faster lending decisions.
2. Comprehensive Lending Data
Lendvest plays a crucial role in aggregating lending data from various DeFi protocols. By delivering comprehensive credit scores, Lendvest improves the underwriting process across TradFi and DeFi platforms. This enables users to make better-informed lending decisions, creating a more robust and sustainable lending ecosystem.
3. Improved Risk Assessment
Traditional DeFi lending protocols often suffer from inefficient underwriting processes, leading to frequent and costly liquidations. Lendvest's credit score differentiates borrowers based on their risk profile, allowing lenders to offer attractive terms to low-risk borrowers and, consequently, higher rates for lenders. This differentiation minimizes the frequency of liquidated loans and mitigates losses.
4. Enabling Tokenized Securities Lending
As the DeFi market evolves and begins to converge with traditional finance, tokenized securities will become a prominent feature. Lendvest's on-chain underwriting powered by Proof of SQL enables capital-efficient securities lending in DeFi, and lays the groundwork for underwriting for trillions of dollars worth of tokenized TradFi assets.
With the integration of Space and Time's Proof of SQL, Lendvest is at the forefront of transforming DeFi lending markets. By enhancing capital efficiency, delivering comprehensive credit scores, and reducing liquidation risks, Lendvest paves the way for a more mature and interconnected DeFi ecosystem. As the boundaries between traditional finance and DeFi blur, the power of Proof of SQL and Lendvest's credit scoring system will play a pivotal role in the continued growth and success of decentralized finance.