- Oracles are needed to bring off-chain data and information into the blockchain
- Money’s Oracle blockchain technology builds the mechanisms used in the old financial system for the cryptocurrency space
- Money is also working on the Decentralized financing equivalent of one creditworthiness, which provides a user’s DeFi history to loan protocols
Using confidence in old finances.
In the old financial system, there are safeguards and measures that reduce risk accordingly to prevent financial institutions from lending to over-indebted borrowers. A borrower’s credit score, along with his benchmark rating, determines the likelihood that he will be able to repay a loan. This applies to personal loans, mortgages, lines of credit and any other products offered by the existing banking infrastructure.
Currently, the arrival of DeFi in the cryptocurrency space has led to a whole new way of interacting within a financial system that is intrinsically separate from the legacy system, which has been pushing its thumb firmly on the public at work for so many years. This has led to what is referred to as the DeFi revolution. At the time of writing this article, the total value locked (TVL) as reported by DeFi Pulse (defipulse.com/) in DeFi measured in USD was just over $ 22 billion dollars. That would mean an annual growth of 3190%. Most of that growth of over 100%, pushing the bar from $ 11 billion to more than $ 22 billion, took place in the past 90 days. No industry has ever seen anything close to this growth.
It is natural, of course, that when something grows so fast – be it an industry, sector, organization or otherwise – it faces mistakes or shortcomings in the infrastructure scaffolding that holds it back. In the case of DeFi, we clearly see the desire to deal with protocols. However, the ratio of the Collateralized Debt Position is still quite uneven and arbitrary. A user with an exceptional history of repaying loans on time, avoiding defaults, and exhibiting trustworthy and prudent behavior will be grouped into the same category of DeFi users participating in the absolutely opposite behavior.
Enter Bird.Money, its Oracle and the Trust Network.
There are oracles. Then there are Bird Oracles.
For those just entering the fascinating world of cryptocurrency and decentralized finance, an Oracle delivers data from outside of the blockchain to within the blockchain. This may seem like a rudimentary statement, but it is more nuanced than it seems from the start. The reason for this is that blockchains themselves work as silos, in the sense that it is actually difficult to bill data from outside the blockchain without the presence of a supply source that can communicate with the blockchain itself. In this case, Oracles provide that necessary function to deliver information and data from outside the blockchain, such as prices, scores, analytics and other information, within blockchain infrastructures in a tamper-resistant manner.
Bird.Money’s blockchain Oracle is developing the tools and mechanisms necessary to take DeFi to the next stage in its evolutionary progression as the latest reliable financial system. By creating an Off-Chain Oracle Data analytics platform for the Ethereum blockchain, the Bird Oracle connects third-party services and investors to the decentralized lending and financing market with low risk and low guarantees. Bird analytics are used to aggregate and validate off-chain metrics to extract consensual data from multiple data points. Borrowers are then able to take advantage of ‘good’ behavior as they go through their interactions with DeFi protocols – loans that are repaid on time, not overused, not participating in scams or ‘back pulls’ where liquidity gets fast removed from decentralized token price and generally be fiscally prudent with their digital assets. That good behavior can then be used to borrow more assets against less upfront collateral, effectively reducing your collateralized debt (CDP) position.
Bird.Money also targets it Rely on network to give a trust score to lending protocols. The DeFi equivalent of the old banking system’s credit score, which provides a user’s DeFi history associated with their ETH address to the lender or lending protocol. This would be a much-needed mitigating factor in ensuring that borrowers with less than favorable Trust Score would have to post more collateral, increasing their CDP to avoid default. It’s a win-win situation for both parties. Borrowers who show good behavior throughout their DeFi history are rewarded by having less collateral for interactions with a loan protocol. Loan protocols gain some form of assurance for that user’s good behavior, which in turn will draw more well-behaved DeFi users to the protocol and allow them to take the necessary precautions against those who show the opposite.
The lines fade
It cannot be overstated how important a role the Bird.Money Oracle is and Trust Network will build a bridge between the old and decentralized financial systems. This is especially true when we consider the recent changes that have been made to US government regulations that allow legacy institutions to now participate in the use of public blockchains. The lines between the two spaces, both centralized and decentralized, are constantly blurring. Bird.Money is well positioned to lead the way to this next frontier of a fairer, more inclusive financial infrastructure.
You can see more on their recently updated 2021 roadmap that uniquely positions Bird.Money’s Oracle platform as well as their Trust Network with a tangible and necessary use case for the DeFi industry.
Road map: https://link.medium.com/KzD8cCdJMcb
Lending platform: https://lend-beta.bird.money/
They are currently checking the underlying smart contracts and then moving to mainnet.