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ARCx Sapphire (v3) Could Fuel Undercollateralized DeFi Loans

ARCx Sapphire (v3) Could Fuel Undercollateralized DeFi Loans
  • ARCx launched version 3 of its Sapphire DeFi passport.
  • The passport could help fuel DeFi undercollateralized loans.
  • Also, ARCx recently raised $1.3 million to develop Sapphire.

DeFi protocol ARCx has launched a revamped version of Sapphire. Sapphire is a DeFi passport that could fuel the growth of undercollateralized decentralized finance (DeFi) loans.

To clarify, ARCx claims Sapphire’s pseudonymous on-chain credit check will enable new DeFi products. Also, the passport will “incentivizes reputation-building and curates on-chain identity into DeFi.”

Further, ARCx believes that DeFi is currently flawed and prone to be biased towards big wallet sizes, institutional backing, and KYC. As such, DeFi could evolve to be as bad as traditional finance resulting in more financial exclusion. As such, Sapphire could help even the playing field, allowing DeFi to be more inclusive.

To achieve this goal, ARCx recently raised $1.3M in a fundraising round led by Dragonfly Capital. Tom Schmidt from Dragonfly Capital noted,

“If we’re going to build a new global financial system, we’re going to need something better than the pseudonymous systems we have today. ARCx is taking us to this next evolution of DeFi by giving users digital passports based on on-chain activity and rewarding them for being good actors.”

Notably, the DeFi passport will rate users from 0 to 999 based on the user’s collateral and holdings. Sapphire also utilizes machine learning to map out users’ future collateral ratios based on past records. In addition, the passport will have two tiers.

The first phase is a basic score that determines users’ identities and the fact that they are human and not a robot. The second phase, however, will determine the users’ collateral ratio.

ARCx expects that DeFi protocols that include the passport will be able to offer exclusive products. For instance, DeFi protocols can offer “low-collateral loans and high-yield farms.”

The ARCx roadmap also includes plans to assess users based on their likelihood of holding on to airdropped or farm tokens. ARCx terms these the “airdrop and yield farming scores.” There will also be a “governance score” and trader score which could help DEXs offer users lower trading fees.

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