How Credit Works
Crowd.Credit offers a graduated credit system that starts with fully-secured credit and progresses to unsecured lines as you build on-chain reputation through CrowdProof.id.
Secured vs. Unsecured Credit
Secured Credit
Your deposits in the DepositVault serve as collateral for your credit line. The amount you can borrow depends on the collateral factor of your deposited tokens:
| Token | Collateral Factor | Example |
|---|---|---|
| USDC | 95% | $10,000 USDC = $9,500 credit |
| USDT | 90% | $10,000 USDT = $9,000 credit |
| DAI | 90% | $10,000 DAI = $9,000 credit |
| ETH | 80% | $10,000 ETH = $8,000 credit |
| wstETH | 75% | $10,000 wstETH = $7,500 credit |
Collateral factors for volatile assets (ETH, wstETH) are lower to account for price fluctuations. Stablecoin collateral factors are higher due to price stability.
Unsecured Credit
As you build your credit history with Crowd.Credit and your CrowdProof reputation score improves, you unlock unsecured credit -- credit that exceeds your collateral value. Unsecured credit is available starting at the ESTABLISHED tier.
Credit Line Calculation
Your total credit line is calculated as:
Total Credit Line = Collateral Credit + Unsecured Credit
Collateral Credit = SUM(deposit_amount * collateral_factor) for each token
Unsecured Credit = f(tier, reputation_score, payment_history)
The unsecured component is determined by your graduation tier and CrowdProof reputation score. The ML scoring engine evaluates 53 on-chain features to assess risk.
Collateral Management
Liquidation Threshold
If the value of your collateral drops below your outstanding credit balance (due to token price declines), you enter a warning zone:
| Health Factor | Status | Action |
|---|---|---|
| > 1.5 | Healthy | No action needed |
| 1.2 - 1.5 | Warning | Notification sent; consider adding collateral |
| 1.0 - 1.2 | Danger | Urgent notification; credit line frozen |
| < 1.0 | Liquidation | Automatic partial liquidation to restore health |
The health factor is calculated as:
Health Factor = Total Collateral Value / Outstanding Credit Balance
Adding Collateral
You can add collateral at any time by making additional deposits. This immediately improves your health factor and may increase your available credit.
Withdrawing Collateral
You can withdraw deposits as long as your health factor remains above 1.5 after the withdrawal. The UI shows your projected health factor before you confirm any withdrawal.
Credit Score Integration
Your CrowdProof reputation score directly influences:
- Credit tier -- Higher scores unlock higher tiers
- Interest rates -- Better scores get lower APRs
- Unsecured limits -- Higher scores allow more unsecured credit
- Approval speed -- High-score applications are approved instantly
The score is computed by 6 dedicated LightGBM models analyzing on-chain behavior across 13 categories, with 7 additional derived categories from rule-based formulas.