A few days ago, Paul Razvan Berg, Founder of Sablier tweeted that he was one of the first people to ever receive an under-collateralized DeFi loan. Because of identity being difficult to prove within a mostly anonymous blockchain network, it has been too risky to borrow tokens without an over-collateralized position. Sablier allows users to prove their income stream, bringing DeFi one step closer to the ability to be under-collateralized.
Aaaand it's happened!
I'm one of the first people ever to receive an under-collateralised loan on Etheruem.
I convinced @pet3rpan_ to lend me 200 DAI by proving him that I'm being paid in real-time on @SablierHQ. See stream with id 20 below.https://t.co/2Ug4962sd6 https://t.co/JE98xrRcvq
— Paul, Streamer of Money (@PaulRBerg) December 17, 2019
Berg didn’t get his loan from a protocol or organization, instead, he asked people that he knew on Twitter. Essentially, Berg took a picture of his face next to his income stream on Sablier and was able to convince Peter Yuan Pan of Meta Cartel to give him a $200 loan that would be paid back by March 11th.
He enquired simply,
“@AlexMasmej @pet3rpan_ now that you can see the money being streamed to me and you know that @SablierHQ is a reputable org that doesn’t fire its founders, would you lend me 10% of the stream’s worth? I’ll pay it back when I get all of the locked up money, that is, on March 11.”
This wasn’t one of Sablier’s intended use cases, according to their introduction blog post. They mostly are aiming to allow continuous income streams in a decentralized manner. Basically, an employer creates a contract with their employee that says “pay Bob $1000 by December 31st,” then the money will continuously be deposited into the Bob’s Sablier contract.
Determining credit scores through income or bank account balance isn’t a new idea though. As countries discusses creating a centrally backed digital currency, a talking point has been to use information that new digital information to create more immersive credit rating.
With Sablier, people can prove that they are getting paid, but there is still (to my knowledge) no mass under-collateralized lending protocol linked to a zero-proof knowledge credit core system. The only incentive that Berg really has to pay his under-collateralized DeFi loan back is that it is public, and bailing would affect his reputation.