Unsecured commercial-grade lending is one step closer to making its debut in decentralized finance (DeFi).
And, in perhaps a sign of the times, it involves a non-fungible token (NFT).
Algorithmic credit risk protocol Teller Finance’s limited alpha mainnet is now live on the Ethereum blockchain following a testnet earlier this year, the startup said Tuesday. The protocol links with traditional finance player Plaid and other data providers to bring real-time credit risk info onto the blockchain. And it's bootstrapping in a novel way – NFT liquidity provisioning.
Each “Fortune Teller” NFT token will not only depict various commissioned collectibles, but will be used for the protocol’s initial liquidity, the team said. Half of NFT sale funds will be placed into the protocol with yield paid out to NFT holders staking funds on Teller. The token will be needed in order to participate in the full alpha mainnet, which goes live April 5.
“With our NFT system, we’ve found a way to supply the protocol’s liquidity and reward our early community members while simultaneously offering a unique access mechanism for the early alpha,” Teller Finance CEO Ryan Berkun said in a statement. “Teller NFT holders will gain immediate APY benefits, and will also have access to longer-term benefits we will reveal at a later date.”
As reported by CoinDesk, Teller Finance has worked with fintech giant Plaid to integrate real-time credit scores into DeFi from over 2,000 financial services. The protocol plans on decentralizing its governance over time as data providers begin natively lending through the application, Berkun said in a Telegram message to CoinDesk.
The integration with the TradFi world is a markedly different step than other DeFi protocols also solving the credit conundrum. Lending protocol Aave, for example, released a credit delegation feature last August that relied more on cryptographic assumptions than incumbent banking systems. Berkun said Teller Finance sees Aave or other DeFi lending protocols as complements, and not competitors.
“Teller is focused on enabling credit risk assessment for DeFi,” he said. “We see ourselves becoming a protocol for other DeFi markets to launch atop or integrate. Maple Finance and Aave are partners in our eyes, who can leverage Teller to bring data based risk assessment into their markets.”