Under collateralized Loans
Over collateralization is a barrier to entry consequently it's important to mitigate market risks that arise from volatility and subsequent liquidation. Traditional financial markets have appropriate credibility assessment measures and corresponding facilitating institutions in place to establish the creditworthiness of a user.
Defi lacks such standard benchmarking mechanisms due to a lack of access to data pertaining to users. This calls for maintaining user data over a period of time to build creditworthiness and record any defaults or non-payment by the borrower. Therefore, by using Koinfox TrustScore borrowers’ evaluation becomes easier for the disbursal of loans at the lowest possible collateralization ratio.