Satoshi Nakamoto made a giant leap in our digital world by introducing a mechanism for creating digital scarcity. Nakamoto consensus fulfilled every cypherpunk’s dream of creating a digital currency outside the influence of government. Combining a proof of work mining algorithm along with blockchain technology and cryptography has ignited a financial movement independent of state control that gives everyone a viable alternative to our current financial system.
Bitcoin solved the double-spend problem and the holy grail of creating a trusted yet decentralized electronic cash system. This allows participants on its peer-to-peer network to validate each transaction and ensure every BTC is indeed legitimate. Creating a decentralized financial network that could be trusted was a revolutionary act and pivotal moment in the history of technology.
Prior peer-to-peer networks were built to distribute content that could easily be replicated. Napster kickstarted this movement by enabling users to download and copy free mp3 songs from each other. The main weakness of the network were centralized servers and a company behind the software.
Bitcoin and other cyptocurrency users have developed the opposite behavior through having network participants validate transactions with decentralized software they can trust while keeping their crypto and using its network to transact globally. This solved many problems including making it nearly impossbile to shutdown while also introducing true digital scarcity.
The problem with our currrent financial system is that is requires trusted third parties. Nick Szabo highlighted this challenge in an article entitled “The God Protocols.”
Using banks and companies for credit entrusts these institutions to fairly assess creditworthiness and not include any biases throughtout the process. This is rarely the case with anything governed by humans. We believe software can level the playing field and introduce a new era of fairness.
Zoracles Protocol has embarked on an ambitious path to solve trust algorithmically. We have created a unique set of signals that will be combined into a mathematical formula that assesses on-chain creditworthiness allowing borrowers to access confidential credit without having to use ANY collateral.
Our algorithm was designed for simplicity but will need maximum efficacy to allow a market for credit without the need of staking your cryptocurrency as collateral. We have considered many ways to increase user accountability and the strength of our algorithm will support additional measures to ensure credit lines are distributed in a fair manner that is unbaised and governed by code.
Solving for trust is important for extending DeFi functionality and the promise of distributed ledger technology. We believe each account can serve as a decentralized ID by building credit ratings and using it across the greater DeFi ecosystem.
Our team will be building a product that is useful for millions of users and easily integrate into complementing lending protocols. Our team believes by building a strong algorithm that can consistently and accurately assign trust to an end user account, we will usher in a new era of blockchain credit that will transform the DeFi landscape.
These are exciting times for the Zoracles community as our project continues to create products that members of our community can use and share. Privacy is still the foundation and credit will be extended confidentially with the use of Zk-Snarks. We hope you find our direction promising and feel free to join us at the links below to engage with the community.
Zoracles partners with DeFi projects using zero-knowledge proofs to provide confidential data to smart contracts. Our product lines include confidential credit, price feeds and a “Snarks-As-A-Service” software platform.