Prime: Credito-Network A Decentralized Global Financial Decisioning Platform

Credito-Network A Decentralized Global Financial Decisioning Platform

Credito is a decentralized global financial decisioning platform to help financial institutions to assess the creditworthiness of an individual or an entity. Credito Score can also be given to people without a credit history or a bank account. Credito Transaction Scores help the institutions to identify and prevent financial fraud.

The offerings of the platform:

Credito Score:

A dynamic marker of a person’s probability to repay a specific loan amount.

A dynamic marker of a person’s probability to repay a specific loan amount and is generated based on the anonymized transaction history of the borrower from various alternative data providers. The uses of anonymised transaction data in scoring for credit risk can increase the predictive accuracy of risk management by identify patterns of behaviour. Transaction scoring helps to gain a deep and clear understanding into their customers’ behaviour. As more banks and financial institutions trail the blockchain, Credito could become standard fare in the future for established players such as large corporations, governments, and central banks.

Credito Scores are by default dynamic and specific to a particular transaction. For example, a person’s loan request for $10K with transactional average of $100K over a year would be scored less risky vs the same person’s loan request of $50K.

Credito provides smarter scores to third parties like banks and other financial institutions in exchange for anonymized transactional data, with the transactional data, scoring models classifies them with various identified Risk Profiles and Risk variables. Transaction Profiles are adjusted based on a customer’s activity relating them to the regional spending patterns, and individualized to each customer Optimized recursive Risk variables.

Credito Transaction Score:

The probability of that transaction being fraudulent, generated in real-time.

Credito transaction score is the probability of that transaction being fraudulent, this is generated in real-time and is derived from transactional fraud analytics, which combines analytic technology and techniques to help detect potential improper transactions, such as those based on fraud and/or bribery, either before the transactions are completed or after they occur.

These days, nearly everyone engaged in fraud leaves behind a trail of digital fingerprints. This presents a big opportunity to prevent further harm, but it is often only considered after the damage has been done. Credito constantly evolves and learns from the new data breaches identified every day, and incorporates the knowledge in calculating transaction scores.

Credito utilises anomaly detection and rules-based methods to combat fraud and corruption. Not only can analytics tools enhance rules-based testing methods, but they can also help measure performance to standardize and help fine tune controls for constant improvement.

CreDApp:

A decentralized peer to peer crypto collateralized crypto lending platform.

Decentralization provides more security and trust. It is a method to organise anything in a way that does not require trust on third parties. The trust is eliminated by executing code that does not require centralized governance, management, or servers. By decentralizing lending, we do not require banks or any other intermediaries for conducting a loan transaction.

Decentralization through the use of Smart Contracts also removes any trust requirement between borrowers and lenders, providing a trustless and transparent lending environment unavailable in today’s market.

Credito is Transparent

Today when you make any transaction through the banking system, you do not have access to the ledger.

Ethereum network provides an immutable ledger, where every transaction is recorded and is always open for inspection. Any transaction that is deployed on Ethereum blockchain could be explored through block explorers.

The transparent ledger removes the trust that normally one would need to have when making a transaction between two banking institutions. In a banking system, the sender has to trust the receiver and vice versa. One needs a receipt of payment to confirm payment.

However, such receipt is not protected against forgery. Therefore, you cannot check whether your counterpart has received the transaction which can create friction and uncertainty.

Credito Analytic Engine

Credito scores aim to de-risk the investor’s investment and the borrowers’ credit score. Credito scores are generated by Credito Analytic Engine, a self-learning algorithm using a continual feedback loop with the help of Big Data analytics, Machine learning, and Artificial Intelligence, offering a score which acts as a dynamic marker of a person’s probability to repay a loan amount, which evolves with the client’s record of loan repayment.

Identity Verification

Registration and Identity Verification is a prerequisite to access the services provided by Credito. Complete documentary evidence of their identity is required, with the information used to do a Know Your Customer (KYC) and Anti-Money Laundering (AML) screening.

The identity will verified against various public and private sources like · Data feeds from centralized Credit Agencies · Public records · Social media · Professional profiles This cross verification disables duplicate registrations by the same user and secures the Credito network.

Once the identity has been verified, it is hashed and stored in the IPFS by linking the individual’s credit score. Storing the data in IPFS makes it permanent and reusable, removing the need for customers to verify for each new loan application, thereby speeding up the entire process.

Risk Variables and Risk Profiles

Risk Variables are the core of the Credito Network’s modeling power. It is crucial that an easily maintainable library of Risk Variables is generated. The primary goal of is to increase the overall efficiency of this self-calibrating scoring model.

Patterns of behaviour.
Location of spending, like merchant info, POS etc.
Preferred online merchants or websites.
Recent spending trends and deviations.
Significant spending activities.
Repeat purchases and / or attempts.
Time of the transactions.
Device information of the transactions originated, like mobile, desktop etc

Risk Profiles are updated by every transaction. The most recent and relevant information is used to make predictions and informed decisions.

Earlier identification of changes in customer behaviour and allows timely scoring decisions.

Risk Profiles keep a track of risk variables which are dynamically updated during the scoring process using a feedback loop that tracks the actions taken by the customer correlated to pre-categorized data.

Credito Analytic Engine Architecture

Credito uses IPFS9 to store the encrypted data. IPFS can work in partitioned networks, and does not need a stable connection to the rest of the web in order to access content. Even if a node fails, it only takes one node adding the content in order to restore availability, removing reliance on a single point of failure. Files on IPFS are content addressed (hash of the file contents) providing versioning guarantees.

Credito synchronizes data across sources, combining merchant data from activity across banks, ensuring account models are complete, continuous offline processing is separated from real-time scoring. Credito Scoring provides real-time transaction scoring abilities and Collector simply passes transactions to the IPFS without scoring.

On-demand Decentralized Analytics

Credito Analytic Engine is continually evolving, reporting a detailed insight of the transaction trends and patterns, as well as providing on-demand decentralized analytics to third parties, such as banks, financial institutions, and data scientists.

On-Chain Off-Chain Components

Credito maintains two on-chain contracts “Credito Scoring Contract” and “Credito Leasing Contract” which we refer to as Scoring Contract and Leasing Contract respectively.

The Scoring Contract has 2 primary functions:

Responding to individual credit score requests
Validating third party transaction scoring requests. Moreover, it also keeps track of the credits balance and usage metrics.

The Leasing Contract is responsible for monitoring the analytic node network’s metrics and allocating nodes to the Scoring Contract requests.

For any given analytic node, the Leasing Contract monitors the following metrics:

Total number of assigned requests: The total number of past requests that a node has agreed to, both fulfilled and unfulfilled.
Total number of completed requests: The total number of past requests that a node has fulfilled. This can be averaged over number of requests assigned to calculate completion rate.
Average time to respond: The timeliness of the node’s responses which is an indicator of the nodes efficiency. Average response time is calculated based on completed requests.
Node reputation: The reputation of the node based on previous scored transactions. All nodes verify and vote each other’s scores, if the majority of the nodes return an identical value, the node become trustworthy. This reputation system helps to identify and remove faulty nodes from the network.

Credito will be a beneficiary of the network effect — each and every transaction will add intelligence and value to the network.

Credito can be configured to report live transaction scores alongside a detailed report which could be helpful in: Detecting anomalies during transactions.
Immediately blocking attempts by recognised fraudsters.
Freezing accounts or cards temporarily until transactions are verified with the owner.
Protecting against country-specific risks.

Credito provides a third party API for the use of Credito Analytic Engine. This API can be integrated into their existing infrastructure to customize reports, select modeling preferences, and to emphasize risk profiles and variables that need to be weighed Credito encourages external node operators to become a part of the Credito Network and incentivizes them with credits. The following figure shows the interaction overview :

CreDApp (The Decentralized App)

The CreDApp is decentralized marketplace serving as an interface for lenders and borrowers. Unlike traditional applications where the backend code is running on centralized servers, a DApp runs on a decentralized peer-to-peer network. CreDApp guarantees trust and transparency thereby eliminating the need of third party intermediaries. A typical DApp is laid out below10.

With a vast database of verified and scored applicants within Credito, CreDApp provides a platform for lending that will encourage smaller and online lenders to get up and running in no time, saving them time and effort of identifying and verifying each customer, enabling more competitive loans and products to be provided to customers. CreDApp encourages lending without borders, means that anyone can agree to lend to anyone anywhere. Small and medium investors can combine their portfolio and start lending immediately with zero initial costs.

The Maker-Taker Lending Model

CreDApp implements Maker-Taker model, to complete a loan agreement Smart Contract. It reduces the friction on the Ethereum blockchain as the order processing is done off-chain and the settlement is done on-chain, minimizing costs because transactions only occur when value is being transferred.

*Employee allocation will have a vesting period of 12 months, 25% vesting each quarter, with a 6 month cliff. Allocation will be proportional to the tenure of each employee by the date of token sale. *Credito Foundation allocation will have a vesting period of 12 months.

The loan agreement process:

Maker creates a credit order in the CreDApp requesting a loan by pledging Token A as collateral for Token B, specifying a desired interest rate, LVR, expiration time, and signs the request.
CreDApp attaches the dynamic Credito report of the Maker to the request, verifies the Maker has enough Token A and freezes them until the loan is serviced or the credit request expires, and broadcasts the request over Credito.
Taker intercepts the request and decides that they would like to fill it.
Taker submits the makers signed request to the Credito with his signature.
The Credito authenticates Maker signature, verifies that the request has not expired and has not already been fulfilled, then creates a smart collateral management contract by transferring the collateral to the smart contract.
CreDApp stores and executes the smart contract on Ethereum blockchain and Token B will be transferred from Taker to Maker.

Credits — The Credito Network Token

Credits are ERC20 tokens which serve as the currency, governance mechanism and rewarding system with in Credito. Credito will be able to set prices and receive payment for their services in the form of Credits.

Token distribution

In order to undertake further development, Credito will conduct a one-off Token Generation Event (“TGE”) and crowd sale of Credits, where 50 % of the Tokens will be made available for public sale. The start date of the TGE will be announced soon, and it will allocate a total Credits supply of 1 billion as follows :

Projected use of funds