Paper 2023/1899

Allowing Blockchain Loans with Low Collateral

Tom Azoulay, Technion – Israel Institute of Technology
Uri Carl, Blue Frontiers Partners, LLC
Ori Rottenstreich, Technion – Israel Institute of Technology

Collateral is an item of value serving as security for the repayment of a loan. In blockchain-based loans, cryptocurrencies serve as the collateral. The high volatility of cryptocurrencies implies a serious barrier of entry with a common practice that collateral values equal multiple times the value of the loan. As assets serving as collateral are locked, this requirement prevents many candidates from obtaining loans. In this paper, we aim to make loans more accessible by offering loans with lower collateral, while keeping the risk for lenders bound. We propose a credit score based on data recovered from the blockchain to predict how likely a potential borrower is to repay a loan. Our protocol does not risk the initial amount granted by liquidity providers, but only risks part of the interest yield gained from the borrower by the protocol in the past.

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Publication info
Published elsewhere. Minor revision. IEEE International Conference on Blockchain and Cryptocurrency (ICBC) 2023
BlockchainDeFiLending PlatformsCollateral
Contact author(s)
tomazoulay @ campus technion ac il
Uri Carl @ bfrontiers com
or @ technion ac il
2023-12-11: approved
2023-12-10: received
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      author = {Tom Azoulay and Uri Carl and Ori Rottenstreich},
      title = {Allowing Blockchain Loans with Low Collateral},
      howpublished = {Cryptology ePrint Archive, Paper 2023/1899},
      year = {2023},
      note = {\url{}},
      url = {}
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