Maven 11 is beyond excited to announce our investment into Spectral Finance. Spectral Finance is a protocol for programmable creditworthiness. What this means is that Spectral offers credit scoring based on the on-chain activity of a user or a group of users. The investment round was led by Polychain with participation from ParaFi, Galaxy Digital, Social Capital and a diverse set of angel investors.
While it might sound like an abstract concept, at a high level programmable creditworthiness is not that difficult. It works in the following way. First, a user provides Spectral with the addresses they want, this can be a single address or a group of addresses. Spectral then provides a MACRO (Multi Asset Credit Risk Oracle) score based on the activity that these addresses had on-chain. The output, the MACRO score, is wrapped into an NFT that a user can use to get loan terms based on their on-chain activity. The most basic example is that a user that has never defaulted on their loans will get better terms (collateralization, interest rate) than a user that got liquidated on every loan.
“Building the infrastructure for programmable creditworthiness lays the groundwork for completely new tooling as we begin to move towards an ecosystem that designs custom and community-centric credit applications,” said Sishir Varghese, co-founder and CEO of Spectral.
Spectral offers an important and new primitive because of how well it fits into the pseudonymous nature of the crypto economy. Every user has multiple wallets and now, they can voluntarily tie them together as one entity or choose not to. However, they have an incentive to do so as the more data they provide, the more accurate the credit risk oracle will be. One of the neat features about wrapping it into an NFT is that it also allows for delegation. DAO members can delegate their credit scores to the DAO representative to take out the best loan. If the DAO representative does not repay however, they all lose (part of) their score. This is a feature that is almost impossible to replicate so effectively and efficiently in TradFi.
“The model Spectral pioneers is a very novel one. One that actually utilizes the transparent and pseudonymous nature of blockchain networks. We believe that this is an inevitable next step for credit scoring and DeFi as a whole. On top of that we have seen what a great execution of their plans the Spectral team has put forward over the last few months so backing them is a no brainer.” - Balder Bomans, Managing Partner Maven 11 Capital
Spectral is entering the closed beta phase soon, and we hope some of you will get to try it out. Otherwise, we invite those of you interested in following the developments of the team to follow their progress on Twitter or join their Discord community to learn more. We are excited about the opportunity to support Spectral in bringing their on-chain reputation scoring system to the broader DeFi ecosystem!