Product Overview
Our product is a protocol for on-chain undercollateralized loans💰. By merging traditional finance 🏦 credit scoring ✅  with Stellar and Soroban, we're revolutionizing lending. 

This protocol tackles the difficulties of traditional credit applications,providing a solution for both borrowers and lenders. It integrates off-chain data 📊 such as credit scores ✅, transactions 💸, and work history 💼 with on-chain credit scoring and Zero Knowledge privacy🛡️ feature. This means users can securely and efficiently access loans while keeping their sensitive off-chain data protected. 

Additionally, identity protocols like SorobanDomains, Chaincerts and existing wallets and payment platforms such as Meru and BeansApp can be integrated in order to offer loans to selected users. With our solution, borrowers can leverage their traditional finance and transactions history and current credit scores to request loans, while lenders can assess their risk tolerance 🎢 and offer loans to selected borrowers.

Key Benefits:

1. Faster Approval 🏎️💨: Credits can get approved quicker than traditional methods.
2. Inclusive Assessment🤝: We consider all your activities, including freelancing, for a fair evaluation, opening doors for more people.
3. Privacy Shield🛡️: Your data stays safe with zero-knowledge proofs, ensuring privacy while still accessing loan options.
4. Easy Integration🍃: Connection with wallets like Meru and BeansApp, making it easy for us to select users.
5. Better Risk Management🔍: Lenders can assess your profile privately, making smart decisions based on their risk comfort.

How It Works:

Borrowers can securely request loans by leveraging their traditional finance history (using Open Banking API’s), current credit scores, and activity in their preferred wallet (like Meru or BeansApp). Our protocol, powered by Soroban and zero-knowledge proofs 🛡️ , verifies users' identities and credit scores without compromising their sensitive off-chain data. Lenders have two options: they can anonymously assess borrower profiles and decide whether to provide loans based on their risk preferences, or they can contribute liquidity to a pool of predefined credit scores. In case of default, borrowers are held accountable through on-chain and off-chain negative records when repaying loans.

With this, our product will also start building an on-chain credit score that can later be used by the off-chain credit scores entity or other on-chain protocols.

Proof of Concept (POC) with Meru:
Selected users are pre-approved based on their activity on Meru, allowing them to request loans and provide additional information for approval. Meru's integration with Stellar facilitates seamless fund transfers, simplifying the borrowing process.

For the following deliverables we will suppose that SCF results will be ready on the 2nd of May 2024:
This means that we suppose to be starting working on this project on the 2nd of May 2024.

1. Credit Score Provider
   1. Brief description: We will mock a centralized credit score provider entity, that based on the user’s National ID, provides the user’s TradFi credit score on a MerkleTree, publishing the root on Soroban, preserving the user’s ID and real credit score. The user can then create a ZKProof to prove that he/she has this credit score. This later will be used to prove that the user has a certain Employment Contract
   2. How to measure completion: Contracts and code will be available on GitHub
   3. Estimated date of completion: 30 May 2024 (1 month)
   4. Budget: $10,000
       
2. Global Economics Model:
   1. Brief description: Study and build a model to calculate the interest rate for borrowing and lending. Will the lenders lend to specific borrowers? Or will the lenders lend to a common pool of similar credit score’s borrowers? Will this be done in a two-steps process? How do we distribute the losses among lenders? How can we create an on-chain reputation system to avoid default? What are the Smart Contracts that we need to develop?
      All these questions will be answered in this study. This is the main work of the SCF
   2. How to measure completion: Study and economic model will be available in our `docs` repository
   3. Estimated date of completion: 30 May 2024 (1 month)
   4. Budget: $10,000
       
3. Frontend POC:
   1. Brief description: Borrowers can ask for loans if they can prove that they have good credit score (giving ZK Proof). Lenders can see a list of borrowers asking for a loan, with their credit score (but preserving privacy). Lenders can lend. Borrowers can return money. If not we can mint a negative record on-chain. 
   2. How to measure completion: Code will be available on Github. Frontend will be available.
   3. Estimated date of completion: 15 June 2024 (1,5 months)
   4. Budget: $7,000
       
4. Credit Score Model: 
   1. Brief description: We will take Meru as an example. They have users with constant revenue streams, employment contracts, etc. That will give them a credit score. We will mix this credit score with a credit score on-chain from their wallet (Will Meru provide a credit score or the data?).
      In order to complete this deliverable we will need to ask help and advice from TradFi people that work on credit scoring.
   2. How to measure completion: The model will be available for reviewers, won’t be publicly available as it will be the core of our business.
   3. Estimated date of completion: 15 June 2024 (1,5 months)
   4. Budget: $9,000
       
5. Smart Contracts: 
   1. Brief description: We will deploy smart contracts to store Merklee Tree information and Verifying contracts on testnet (**). Also, we will deploy a set of contracts to make the solution work. First, the Pool contract, in which lenders can invest and borrowers with a certain score can ask for loans. Second, a factory contract that will allow borrowers to create pools  with specific rates and lenders can decide to invest in those pools(***).
   2. How to measure completion: Code will be on Github, Contracts will be on Testnet.
   3. Estimated date of completion:  30 May 2024 (1 month)
   4. Budget: $9,000
       

(**) Here, depending on the state of ZK proof verification on Soroban, it might be possible that we will need to develop a centralized oracle that will verify ZK proofs.

(***) Depending on the Global Economics Model, the stack of contracts may change.

The team behind this project is PaltaLabs 🥑, the same team behind Soroswap.Finance!. Check https://paltalabs.io/. We manage a team of 6 full-time devs.

‍Esteban Iglesias (esteblock)
Founder / Senior Full-stack Blockchain Developer
As a self-motivated polyglot professional with over 10 years of experience in full-stack development. Passionate about innovation, decentralization, and the power of blockchain technology. Chilean with a background in Electrical Engineering and a master's degree in Applied Economics with studies in France (École Centrale Paris), UK (University of Oxford), and Chile (Universidad de Chile).
Personal Web Page / Linkedin / Github

Francisco (devmonsterblock)
Senior Full-stack Blockchain Developer
Driven by curiosity and a passion for blockchain technology, I am an experienced (6 years) full-stack developer with expertise in Soroban, Ethereum, Solana, Avalanche platforms. My academic foundation includes an Electrical Engineering degree from Universidad de Chile and General Engineering from Ecole CentraleSupelec, France.
Personal Web Page /Linkedin / Github

For the progress and completed deliverables of our Soroswap.Finance project, please check our dedicated “scf trackers”. 

We have completed 100% of the SCF#14 and SCF#17 deliverables. For SCF #21 we have completed about 80% of them. We expect to complete 100% by the end of April 2024, when the results of this grant will be available

• SCF#14: Soroswap Protocol - scf-tracker-14
• SCF #17: Soroswap Protocol II - scf-tracker-17
• SCF #21: Soroswap.Finance Aggregator - scft-tracker-21

There is a lot of things to do, work and resolve in order for this to happen, and we would like to do things step-by-step:

2024 Q2 - Q3: SCF#26: POC:

• Develop a Testnet protocol with mock-data credit score providers and centralized off-chain zero-knowledge proof verifiers (as Soroban verification isn't feasible yet).

• Design an economic model, including interest rates.
• Define the Smart Contract architecture and develop the first version.
• Collaborate with Meru to utilize anonymized data for algorithm testing and training.

2024 Q3 - Q4: SCF#26+: MVP with Meru: 

• Identify real users on Meru to offer pre-approved credit based on their activity.

• Enable users to request loans and provide additional traditional finance information for approval.
• Implement real usage of zero-knowledge proofs to safeguard user data on-chain.
• Launch the platform on Mainnet, accessible to a select whitelisted group of lenders.

2024 Q4 - 2025: Seek funding: 

In order to go big, we would need to figure out several legal aspects and find a lot of partners. We aim to partner with credit score providers to bring their data on-chain and enhance our credit assessment capabilities. In order to achieve all of this, after the POC and MVP we will need to seek funding. We expect to be ready with our MVP for WebSummit Lisbon 2024 (November 2024) and showcase our product there.