There’s a quote from James Rickards, the author of Currency Wars, where he said, “Currency is not only used for purchase... people should be able to lend and borrow to make it a currency.” “Currency is not only used for purchase... people should be able to lend and borrow to make it a currency.” “Currency is not only used for purchase... people should be able to lend and borrow to make it a currency.” Currently, the cryptocurrency market is valued at over $3 trillion. You can send it, trade it, and even hold it, but it’s not a full-fledged currency. It needs a credit network so we can use it to build wealth through lending and borrowing. valued at over $3 trillion valued at over $3 trillion Credit systems are the foundation of our economy. They let people and businesses get the capital they need to grow, even if they don't have all the money up front. Thevalue of the consumer credit market alone is around $12 billion. And this number is expected to grow to over $18.5 billion by 2031. value of the consumer credit market value of the consumer credit market Still, the way we do credit now is pretty old-school. It's all managed by a few centralized institutions. Banks and credit bureaus use scoring systems that a lot of people don't even understand. They rely on limited data and apply to specific regions. This leaves out the billions who are unbanked or SMEs with no formal credit history. This is where on-chain credit comes in. But what does it even mean? What On-Chain Lending Means What On-Chain Lending Means On-chain credit is a decentralized system of lending and borrowing. It operates on blockchain networks and removes intermediaries like banks or credit bureaus. Instead, it employs smart contracts to assess creditworthiness and make lending easy. And as such, it increases access without the traditional barriers that demand collateral. All without compromising security, verifiability, and transparency. So yeah, DeFi offers new and innovative financial options. But because it’s a system on the blockchain doesn't make it safe. Trust and Security Challenges Decentralized Lending Platforms Face Trust and Security Challenges Decentralized Lending Platforms Face Decentralized lending is a new kind of financial system. A model that's supposed to be more transparent and open than the traditional one. Even so, this shift comes with its own set of challenges. The trust we once placed in banks is now placed in smart contracts, and this makes Defi risky makes Defi risky makes Defi risky Here are the main trust and security challenges decentralized lending platforms face: 1. Smart Contract Vulnerabilities Unlike banks with tightened security, a Defi protocol has many points of failure. Exploits in vulnerability in one component can drain funds from the entire system. Since 2021, smart contract weakness has caused over $6.7 billion in losses from DeFi protocols. While this dropped from $3.1 billion in 2022 to $1.1 billion in 2023, the scale of the thefts shows the risk involved. For example, a glitch caused the Compound protocol to send millions of dollars to users. Likewise, the PolyNetwork hack in 2021 saw hackers steal $600 million, though the funds were later returned. dropped from $3.1 billion in 2022 to $1.1 billion in 2023 dropped from $3.1 billion in 2022 to $1.1 billion in 2023 PolyNetwork hack in 2021 PolyNetwork hack in 2021 2. Lack of Consumer Protection Lack of Consumer Protection DeFi operates in a regulatory vacuum. This means there are no safeguards for users when something goes wrong. There are no government-backed reimbursement schemes. Neither are there laws that enforce capital reserves for DeFi service providers. If a protocol is hacked or collapses, users have little to no protection and can lose their funds forever. This is a contrast to traditional finance. Here, deposits are often insured by government bodies like the FDIC in the U.S. Also, with DeFi, users are in charge of their security. Losing a private key means denied access to your funds for life. 3. The Challenge of Under-collateralized Lending For DeFi to compete with traditional finance, it needs to move beyond over-collateralization. The goal is to create uncollateralized or under-collateralized loans. This means you can borrow money without locking up more than the loan's value. Yet, moving away from collateral introduces new problems that traditional banks have solved: Who is the borrower? Who is the borrower? Who is the borrower? It's hard to verify a borrower's identity and creditworthiness without a centralized authority. How do you price their default risk? How do you price their default risk? How do you price their default risk? Without a traditional credit score, how do you know if a borrower is likely to repay their loan? What happens if they don't pay? What happens if they don't pay? What happens if they don't pay? Without collateral tied down, there are no automated ways to enforce loan repayment. So, Here’s how Creditcoin Solves On-chain Trust and Security Challenges So, Here’s how Creditcoin Solves On-chain Trust and Security Challenges On-chain lending, with all its promise, has a big trust problem. It relies on collateral, not a person’s reputation. Creditcoin's co-founder, Tae Oh, explains it best. He says their goal is to break the "vicious cycle" that billions of unbanked people live on repeat. He says their goal is to break the "vicious cycle" that billions of unbanked people live on repeat. He says their goal is to break the "vicious cycle" that billions of unbanked people live on repeat. That vicious cycle; They take out a loan from a local lender Repay it on time, but none of that activity is ever recorded by a traditional bank. Because this person's credit history is invisible, they can't get a formal loan. So they have to go back to informal, high-cost lenders. They take out a loan from a local lender Repay it on time, but none of that activity is ever recorded by a traditional bank. Because this person's credit history is invisible, they can't get a formal loan. So they have to go back to informal, high-cost lenders. This cycle becomes endless. It’s for this reason that Gluwa created the Creditcoin protocol in 2019. The network enables cross-blockchain credit transactions and credit history building. Gluwa created the Creditcoin protocol Gluwa created the Creditcoin protocol Here's how it works: Here's how it works: Creditcoin partners with real-world financial companies, like Aella in Nigeria. This fintech uses the network to record every loan it makes and repayment it receives. The record is then verified and stored on the blockchain. This means that if a borrower repays a microloan, that positive credit history is recorded. And as such, building a verifiable reputation over time. Since all these transactions are on-chain, they're permanent and public. An impossible feat in the past. Creditcoin empowers lenders to offer under-collateralized or even unsecured loans. Lenders no longer have to rely on a borrower having crypto as collateral. Instead, they make lending decisions based on a borrower's track record of repayment. Creditcoin partners with real-world financial companies, like Aella in Nigeria. This fintech uses the network to record every loan it makes and repayment it receives. The record is then verified and stored on the blockchain. This means that if a borrower repays a microloan, that positive credit history is recorded. And as such, building a verifiable reputation over time. Creditcoin partners with real-world financial companies, like Aella in Nigeria. This fintech uses the network to record every loan it makes and repayment it receives. The record is then verified and stored on the blockchain. This means that if a borrower repays a microloan, that positive credit history is recorded. And as such, building a verifiable reputation over time. Creditcoin partners with real-world financial companies, like Aella Creditcoin partners with real-world financial companies, like Aella Since all these transactions are on-chain, they're permanent and public. An impossible feat in the past. Since all these transactions are on-chain, they're permanent and public. An impossible feat in the past. Creditcoin empowers lenders to offer under-collateralized or even unsecured loans. Lenders no longer have to rely on a borrower having crypto as collateral. Instead, they make lending decisions based on a borrower's track record of repayment. Creditcoin empowers lenders to offer under-collateralized or even unsecured loans. Lenders no longer have to rely on a borrower having crypto as collateral. Instead, they make lending decisions based on a borrower's track record of repayment. The Troubles of On-Chain Lending The Troubles of On-Chain Lending Troubles As of July 2025, on-chain market records over $35 billion in active loans. Factors such as real-time transparency and risk management contributes to this success. on-chain market records over $35 billion on-chain market records over $35 billion On-chain lending might seem "risk-free" in theory. But in real life, both borrowers and lenders face risks that are unique to this new financial system. "risk-free" Risks for Borrowers Risks for Borrowers High Collateral Requirements High Collateral Requirements High Collateral Requirements Over-collateralization is a safety net for lenders, but it's a big restriction for borrowers. Almost all DeFi loans need at least 100% of the loan value in crypto assets locked, if not more. This safety net has helped DeFi lending grow to become the single largest segment of DeFi in As of June 2025. This makes it impossible for many people to get a loan for something they need but don't have the collateral for. It's a system designed for those who already have crypto assets, not for the unbanked or SMEs. Liquidation Risk Liquidation Risk Liquidation Risk This is the biggest danger for a borrower. If the value of your collateral drops below a certain threshold, the smart contract will sell your assets to repay the loan. This happens without warning. During a volatile market downturn, a borrower can lose a significant portion of their assets, even if they had no intention of defaulting. Risks for Lenders Risks for Lenders Smart Contract Risk Smart Contract Risk Smart Contract Risk The entire system relies on code. If there's a bug or a vulnerability in that smart contract, lenders could lose all their funds. We've seen this happen time and again, with billions of dollars wiped out by hacks and exploits. Liquidity Risk Liquidity Risk Liquidity Risk The system relies on having buyers and sellers to guarantee an available market for the collateral. While DeFi protocols performed well during the FTX collapse, a major crash could leave them without enough people to sell a borrower's collateral to. In this case, lenders would be left with frozen or stuck assets, unable to get their money back. Creditcoin Bridges Under-Collateralized Loans to the Real World Creditcoin Bridges Under-Collateralized Loans to the Real World If crypto lending is going to grow to its full potential, DeFi must solve a few tricky challenges first. Especially those tied to overcollateralization. The protocol addresses these issues by onboarding real-world credit infrastructure on-chain. It brings credit histories and reputation systems to unlock new lending markets and expand global access to capital. On-Chain Credits Without Collateral - Building Trust with Creditcoin On-Chain Credits Without Collateral - Building Trust with Creditcoin In traditional finance, trust revolves around a person's credit score. In early DeFi, it was built on over-collateralization. This locks up more money than you borrow. Creditcoin presents a decentralized, verifiable credit history to build trust between lenders and borrowers. How Creditcoin Establishes Trust Between Lenders and Borrowers On-Chain How Creditcoin Establishes Trust Between Lenders and Borrowers On-Chain Creditcoin builds trust by moving beyond the need for traditional intermediaries like banks. It creates a direct link between investors (lenders) and fundraisers (borrowers). Here’s how it works: Here’s how it works: A borrower posts an offer on the Creditcoin network. They state the loan amount, interest rate, and due date. When a lender with matching conditions is found, they announce the deal to the network. The protocol confirms every step of the loan. Starting from the initial loan being sent to the final repayment. This happens by confirming the transaction ID on other blockchains like Bitcoin or Ethereum. The transaction is then broadcast to the entire network for validation. These transactions are verified and recorded on a tamper-proof blockchain. Hence, a reliable record of a person's repayment behavior is certain. Each successful repayment is logged and becomes part of a borrower's decentralized credit history. Lenders can use this history to calculate risk with a credit-scoring model of their choice. A borrower posts an offer on the Creditcoin network. They state the loan amount, interest rate, and due date. When a lender with matching conditions is found, they announce the deal to the network. A borrower posts an offer on the Creditcoin network. They state the loan amount, interest rate, and due date. When a lender with matching conditions is found, they announce the deal to the network. The protocol confirms every step of the loan. Starting from the initial loan being sent to the final repayment. This happens by confirming the transaction ID on other blockchains like Bitcoin or Ethereum. The transaction is then broadcast to the entire network for validation. These transactions are verified and recorded on a tamper-proof blockchain. Hence, a reliable record of a person's repayment behavior is certain. The protocol confirms every step of the loan. Starting from the initial loan being sent to the final repayment. This happens by confirming the transaction ID on other blockchains like Bitcoin or Ethereum. The transaction is then broadcast to the entire network for validation. These transactions are verified and recorded on a tamper-proof blockchain. Hence, a reliable record of a person's repayment behavior is certain. Each successful repayment is logged and becomes part of a borrower's decentralized credit history. Lenders can use this history to calculate risk with a credit-scoring model of their choice. Each successful repayment is logged and becomes part of a borrower's decentralized credit history. Lenders can use this history to calculate risk with a credit-scoring model of their choice. This process establishes trust through verifiable on-chain data. Lenders don't have to trust the borrower. They can trust the publicly recorded credit history on the Creditcoin blockchain. This is the foundation for an on-chain credit market that can operate without over-collateralization. And as such, this creates… A “Trust-Minimized” System - Middlemen?..Lol A “Trust-Minimized” System - Middlemen?..Lol “Trust-Minimized” Creditcoin is working with major financial institutions to bring real-world assets on-chain. It records loan terms, repayments, and credit performance on a multi-blockchain protocol. In a nutshell, here’s how the system builds trust; It Creates a Public, Immutable Credit History It Creates a Public, Immutable Credit History It Creates a Public, Immutable Credit History Creditcoin's core purpose is to be a public ledger for loan performance. When a lender and borrower make a deal, it's recorded on the network. Every time a borrower makes a payment, it's also recorded. This creates a transparent, immutable credit history that can't be changed or deleted. It Bridges Real-World Assets to the Blockchain It Bridges Real-World Assets to the Blockchain It Bridges Real-World Assets to the Blockchain A problem in DeFi is that everything depends on assets like Ethereum or Bitcoin. Creditcoin changes this by bringing real-world assets (RWAs) on-chain. Invoices, receivables, or even assets from decentralized physical infrastructure networks (DePINs) can serve as collateral. Instead of volatile cryptocurrencies, tangibles can secure a loan. This builds more confidence for lenders. It Enables Trustless, Under-Collateralized Lending It Enables Trustless, Under-Collateralized Lending It Enables Trustless, Under-Collateralized Lending The way Creditcoin builds trust is by moving lenders past over-collateralization. Borrowers' credit history is now verifiable on-chain. So a lender calculates their trustworthiness based on their reputation rather than on the value of their collateral. This trust happens because of key features. Creditcoin’s Features: A Key to Secure, Verifiable On-chain Credit System Creditcoin’s Features: A Key to Secure, Verifiable On-chain Credit System The protocol is building a verifiable credit infrastructure that can connect the DeFi with the global economy. It uses several features to make sure that every transaction is secure and verifiable. These include; Blockchain Agnostic Blockchain Agnostic Blockchain Agnostic The network works with different blockchains like Bitcoin and Ethereum - as long as there’s a plug-in. Its nodes can verify transactions on other networks using transaction IDs. This creates a secure, cross-chain system that is not limited to a single network. Transaction Fees Transaction Fees Transaction Fees From a loan issuance to a repayment being made, it requires a small fee paid in Creditcoin's native token ($CTC). These fees are locked on the network. It acts as a reward for the validators who verify and secure the transactions. Decentralized Verification Decentralized Verification Decentralized Verification Creditcoin relies on a network of validators to verify and approve all transactions. This distributed process ensures that the credit history is secure and unchangeable. Scaling Blockchain-Based Lending Systems to Serve the Underserved Scaling Blockchain-Based Lending Systems to Serve the Underserved Traditional credit systems fail to match the “trust-minimized” ideals of their on-chain counterparts. This means that the billions of unbanked individuals are not catered to. “trust-minimized Why? Because they don’t have a credit reputation record to access any financial offering. That’s a huge scalability problem that traditional finance isn't built to solve. Let’s get into more of these scalability issues. Scalability Problems Traditional Credit Systems Face These revolve around; 1. High Costs and Time-Consuming Processes 1. High Costs and Time-Consuming Processes The traditional loan application process takes time. It relies on extensive paperwork, physical verification, and human underwriters. This manual nature of the system makes it expensive to process each loan application. These costs are often passed on to the consumer in the form of fees and higher interest rates. In turn, makes it unprofitable for banks to serve these markets. 2. Financial Exclusion of the "Credit Invisible" 2. Financial Exclusion of the "Credit Invisible" "Credit Invisible" 1.4 billion adults globally are financially excluded, according to reports. Yet, traditional lenders rely on a formal credit history to assess creditworthiness. These individuals don't have a verifiable credit history. Therefore are excluded by traditional lenders. 1.4 billion adults globally are financially excluded 1.4 billion adults globally are financially excluded Also, small and medium-sized enterprises (SMEs) face a big financing gap. An estimated $5.7 trillion will meet the financing needs of these businesses in developing economies. A shortfall that traditional systems are ill-equipped to address. An estimated $5.7 trillion will meet the financing needs An estimated $5.7 trillion will meet the financing needs We understand now that traditional systems fall short. So, what’s the way forward? Creditcoin’s Approach: Scaling for Success Creditcoin’s Approach: Scaling for Success Gluwa and Creditcoin have demonstrated leveraging blockchain-based solutions to real-world problems. This journey has been nothing short of a success. So far, over $5M in on-chain credit transactions have been processed. Also, it's pulling more than $70M in real-world loan volume through fintech partners operating in emerging economies. more than $70M in real-world loan volume more than $70M in real-world loan volume Two major initiatives are in line with its scaling efforts: Central Bank Digital Currency (CBDC) Central Bank Digital Currency (CBDC) Central Bank Digital Currency (CBDC) Gluwa is working with the Central Bank of Nigeria on integrating the eNaira with Credal. Credal is the API powering the Creditcoin network. This integration will harness blockchain to boost adoption and improve eNaira functionality. Gluwa is working with the Central Bank of Nigeria Gluwa is working with the Central Bank of Nigeria EVM-Compatibility Upgrade EVM-Compatibility Upgrade EVM-Compatibility Upgrade Creditcoin is upgrading its network to be EVM-compatible to prepare for growing demand. It extends an invitation to innovation from dApp developers outside of the organization. This is the first step towards transforming it to become a Global Smart Contract protocol. Lending Beyond Borders: Satellites and Creditcoin Lending Beyond Borders: Satellites and Creditcoin Creditcoin breaks down the barriers of traditional finance and makes lending global. Spacecoin is a classic DePIN built on Creditcoin. Spacecoin is a classic DePIN Spacecoin is a classic DePIN DePINs are networks that use blockchain to build and operate real-world infrastructure. Such as solar grids, wireless networks, or transportation systems. They're all about letting communities co-finance and manage these projects. Nonetheless, a major hurdle for these networks is raising the capital they need to scale. Creditcoin flips that switch. The network allows a DePIN's - such as Spacecoin - members to use their on-chain credit history as a form of collateral. This verifiable history, built from past on-chain repayments, gives lenders the trust they need to provide capital. It's a system that lets people from anywhere in the world invest in and fund projects in other countries. This is the foundation for a global credit market. In this case, a person's reputation determines their access to capital - not their location or traditional financial status. Looking Ahead Looking Ahead What's next for Creditcoin? What kind of future could it shape, both for the world of DeFi and for the global financial system? Creditcoin Vs. the Future of DeFi Creditcoin Vs. the Future of DeFi Today's DeFi lending is great. But it’s exclusive. It’s like a VIP club for people who already have crypto assets. You have to lock up way more in collateral than you want to borrow, which is a major barrier for most people. Creditcoin changes this by focusing on reputation over collateral. Instead of asking, "How much crypto do you have?" the system asks, "How well have you paid back your loans?" This attracts institutional investors and helps boost confidence in the ecosystem. In turn, turns DeFi into a more mature and legitimate financial system. Creditcoin Beyond the Financial Ecosystem The biggest impact of Creditcoin goes far beyond the crypto space. It’s about the inclusion of the 1.4 billion unbanked people. It gives these individuals a digital financial identity. At last, a small business owner in a developing country gets access to better loan terms. The ripple effect… Creditcoin isn't building a credit network for crypto. It's building a foundation for a more inclusive global financial system. One that changes the lives of the billions of people left behind by traditional finance. And there we have it, more banked people in emerging economies. Thanks, Creditcoin!
