A study regarding how to unlock IRL reputation in web3 was carried out through the CoLab Fellowship (a RnDAO's and Arbitrum DAO's research program). The study is available [here](https://mirror.xyz/hbesso31.eth/FPZwO9TMecWReO76YjJx-1p-AAgntdnVxF8Cz8zUp-U), and it was developed by one of the team members of this grant.

The study found out that the data coming from web apps (such as Google Maps) and from RWA assets (such as title deeds, municipal license, bills, etc) provide an enough initial trust level for web3 lenders to offer a micro credit of $100 (and upto $500) to local businesses.

The study delivers a graph made from the insights of interviews, onfield observation, and document analysis carried out by the research. The graph is found below in Figure 1.
Figure 1 shows that if data is tokenized through attestations that can be validated and stored within a smart wallet -that serves as a decentralized identity (DID), then IRL businesses can tap into DeFi.

**Figure 1**

This grant aims to build a dApp that local business can use to borrow in DeFi and build a sovereign credit score, which allows them to progressively access cheaper and larger credits.

We've planned a milestone-based progress which has budget constraints:
### 🎯 Milestone 1 -> already working on it
**1. Smart wallet creation** using [Candide's SDK](https://candide.dev/).
**2. Gamified Trust Score onboarding.** Here is where the person looking for a credit will fill out verifiable credentials (following the Gitcoin Passport scheme). Each credential is verified by Ai and algorithms such as with [Reclaim Protocol](https://www.reclaimprotocol.org/), and [Holonym](https://www.holonym.id), and in some cases they can be verified too by a trusted agent on the ground (such as to verify home and business addresses).

### 🎯 Milestone 2 -> unlocked if we get $5K to $15K
**1. Trust weight of each stamp (verifiable credential).** The weight will defined collectively by a focus group of financial workers, lenders, and borrowers, and peer reviewed by web3 and reputation practitioners, such as those within [The Trusted Seed](https://trustedseed.org/).
**2. deCredit Score as a smart escrow.** The smart wallet will hold four main functions enabled by smart contracts:
**i. Collateral delegation.** Allow the borrower or a third party to lend collateral (fork of Aave's credit delegation) and earn from backing up the credit line, or if the borrower is the one providing collateral then decrease the interest rate.
**ii. Collateral vault.** ReStake the collateral in proven low risk DeFi strategies so that the collateral makes money while being passively protecting the loan.
**iii. Automate conditions.** Trustlessly automate penalizations, rewards, and profit distribution.
**iv. Credit score update.** Attestations will be automatically issued from payment behavior, and these will trigger an increase or decrease to the person's trust levels, and therefore to their interest rate within its Decentralized Credit Score.
**3. Gamified interest rate.** Based on the trust score and the collateral in place, a smart contract will update the interest rate and offer tips, opportunities, and benefits.

### 🎯 Milestone 3 -> unlocked if we get over $20K
**1. Pilot test!.** We have agreed with a financial institution in México to test this solution with 100 clients.
**2. Documented insights.** Open knowledge is key to enable others to audit, replicate, and improve what we are doing, while also support us to keep a constant improvement mindset.

# 🏆 Team
Humberto Besso Oberto H. Researcher and Business Dev.
Sofía Villareal. Designer.
Irwing Durán. Front-end dev.
Johan De Jesús. Front-end dev.

# 🖨 Open source
We are gathering all knowledge and code in here: https://github.com/Urbanika/DeFi-Adoption-IRL

We gathered an initial validation from supporters during the past Beyond Coordination round...

# 📱 The proposed UI
**Onboarding UI**

**Borrower's profile**

**Borrower's personal interface**

# 💝🌎🌍🌏💕Why funding this matters?
Verifiable off-chain data will ease the path for more people to benefit from the potential that decentralized and regenerative finance can bring to local economies, and as an open source development it can be forked and modified to cover plenty of other use cases.

Vonating to this project means supporting the development of scientific research for public good.
Please do consider us!

## Do you want more info?
We encourage you to:
1. Read the [paper](https://mirror.xyz/hbesso31.eth/FPZwO9TMecWReO76YjJx-1p-AAgntdnVxF8Cz8zUp-U).
2. DM us or invite us to hold a conversation on how to improve the approach.
3. Read below some other details about the UI and approach.

**Why an UI inspired in Gitcoin Passport?** three simple but powerful reasons:
1) This UI has been battle-tested for web3 trust scores,
2) It has been evolving for years through collective intelligence and deep research regarding anti-sybil attacks,
3) It enables building on top of it with a guaranteed interoperability due to the wide variety of integrations working as stamps.

**Doing this will provide the following advantages:**
* a clear roadmap of which stamps are required to claim for getting a lower interest rate.
This means that credit scores will be easy to understand for even a child, thus smoothing the process of credit lending.

* Enabling different trusted parties to issue vouches for others, in this way, a P2P web of trust can emerge.
With a web of trust a lender can lend money to a stranger that is vouched by someone she directly trusts. And even better, if the vouching person is someone on the ground that can enforce responsibility, then the lender knows that there's support on the ground, unlocking the DeFi potential for everyone outside crypto.

* Off-chain data can be tokenized as attestations by sources that directly or indirectly stake their reputation for providing that source of truth.
Validating off-chain data opens the possibilities to add a decentralized validation system where peers stake something that can be challenged by others.

# Thank you for your support!