zScore: A Universal Decentralised Reputation System for the Blockchain Economy
This addresses the need for verifiable trust in blockchain-based economies, offering a decentralized solution for creditworthiness assessment, though it appears incremental by building on previous attempts like Cred.
The paper tackles the problem of quantifying credibility in the trustless onchain economy by introducing zScore, a decentralized reputation system based on onchain behavior and AI models, which shows a strong correlation with healthy borrowing and repayment in lending protocols.
Modern society functions on trust. The onchain economy, however, is built on the founding principles of trustless peer-to-peer interactions in an adversarial environment without a centralised body of trust and needs a verifiable system to quantify credibility to minimise bad economic activity. We provide a robust framework titled zScore, a core primitive for reputation derived from a wallet's onchain behaviour using state-of-the-art AI neural network models combined with real-world credentials ported onchain through zkTLS. The initial results tested on retroactive data from lending protocols establish a strong correlation between a good zScore and healthy borrowing and repayment behaviour, making it a robust and decentralised alibi for creditworthiness; we highlight significant improvements from previous attempts by protocols like Cred showcasing its robustness. We also present a list of possible applications of our system in Section 5, thereby establishing its utility in rewarding actual value creation while filtering noise and suspicious activity and flagging malicious behaviour by bad actors.