I am participating in Based India to showcase how blockchain technology can transform financial systems, especially in developing economies like India. The decentralized finance (DeFi) space has immense potential to improve financial inclusivity, but the current overcollateralization requirements in DeFi loans limit accessibility for smaller players. Through my project, Decentralized Credit Scoring System (DCS), I aim to tackle this issue by enabling undercollateralized loans, which could be a game-changer for underserved communities.

Being from Delhi-NCR, I have a strong connection to the region and have seen firsthand the challenges many people face in accessing fair financial services. DeFi provides an opportunity to offer more transparent, accessible, and decentralized financial tools. Base’s low-cost, scalable infrastructure makes it ideal for running applications like DCS that need secure and efficient handling of on-chain data.

Participating in Based India is a chance to highlight how my project can help bridge the gap between Web3 technologies and real-world financial problems. I’m excited to connect with a community that is passionate about building decentralized solutions for India’s growing blockchain ecosystem, and Base offers the perfect platform for this innovation.

In the traditional financial system, one of the biggest challenges for people, especially in developing countries like India, is access to fair credit. Many individuals don’t have the collateral or credit history required to secure loans from traditional financial institutions. This limits their ability to invest in their businesses, education, or personal development. Even in the DeFi space, access to loans is often restricted to those who can overcollateralize.

I’m focusing on solving this problem by creating a Decentralized Credit Scoring System (DCS) that offers under-collateralized loans based on transparent, verifiable on-chain credit scores. With Base’s efficient, scalable infrastructure, DCS can calculate credit scores based on a user’s history of borrowing and repayment across DeFi protocols, ensuring fairer access to loans.

The challenge I’m addressing is financial inclusivity. By utilizing blockchain technology and decentralization, DCS offers a way to bypass the need for a trusted central authority or a traditional credit history. This solution is particularly valuable for unbanked or underbanked individuals who don’t have access to the traditional credit system. Base allows for cost-effective deployment of smart contracts, making this solution scalable to large populations.

With India’s growing adoption of Web3 technologies, DCS can have a significant impact on providing fair, accessible financial services, empowering communities to leverage blockchain for financial growth.

The Decentralized Credit Scoring System (DCS) aims to solve the problem of overcollateralized loans in DeFi by introducing on-chain credit scores that allow users to access under-collateralized loans. This project leverages the Base to offer scalable, secure, and low-cost smart contracts for calculating a user’s credit score based on their lending and borrowing history.

The core of DCS is a smart contract system deployed on Base, which calculates credit scores based on factors like repayment history, loan-to-collateral ratio, and borrowing frequency. These scores enable users to borrow without requiring excessive collateral, making DeFi lending more accessible, particularly to unbanked or underbanked populations. This addresses the problem of capital inefficiency and opens up the DeFi ecosystem to more users who would otherwise be excluded.

The potential impact of DCS is significant. By reducing collateral requirements, the system allows smaller users to access loans, thereby promoting financial inclusion. The use of a Decentralized Identity (DID) linked to credit scores ensures that users can carry their financial reputation across multiple DeFi platforms. Additionally, the transparency and security of blockchain ensure that credit scores are verifiable and immune to tampering.

By being built on Base, DCS benefits from lower transaction costs and scalability, making it an ideal solution for large-scale adoption in regions like India, where financial access is a critical issue.

Real-Time On-Chain Data Fetching

Another challenge was fetching real-time on-chain data to calculate credit scores. I initially attempted to use decentralized oracles, but due to costs, I manually integrated APIs from platforms like Aave. This solution worked for the hackathon, but in future versions, I plan to automate this process using oracles.

Non-Technical Challenge: User Adoption

The biggest non-technical challenge was ensuring that potential users, especially those unfamiliar with DeFi, understood how the platform worked and the benefits of on-chain credit scoring. To address this, I created a simple, intuitive UI using React and Next.js, with easy-to-use dashboards for borrowers and lenders, making DeFi loans accessible even for non-technical users.