Why Multi-Chain Credit Scoring Is Important
November 20th, 2024
Credit scores vary considerably across chains and protocols, as users behave differently on each.
The graph illustrates two extremes in the credit risk profiles of borrowers on Arbitrum and Optimism. The average borrower on Optimism (regardless of protocol) is more likely to meet their debt commitments than borrowers on Arbitrum.
Some key factors impacting credit scores include:
- User loyalty
- Collateral supply type (e.g., stablecoins vs. cryptocurrencies)
- Collateral price fluctuations (e.g., market conditions)
- User sophistication
- User maturity
- Recent user activity
The above-mentioned factors vary significantly by chain. Blockchain Bureau calculates thousands of variables for each wallet on every chain, allowing lenders to enter the market with confidence.