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Sublime: A Decentralized Credit System Leveraging Social Capital

Sublime: A Decentralized Credit System Leveraging Social Capital

The world bank reports that more than 2 billion people worldwide lack access to working capital and financial services. Yet records show that only 67% of the world’s adult population is covered by credit bureaus across the globe.

As it seems, the main bottleneck that stands in the way of the increased availability of loans is the difficulty in establishing accurate and reliable credit scoring systems. When it comes to credit scoring, one size simply doesn’t fit all. 

In traditional finance, credit scoring systems are highly centralized with an overall structure that is highly data-intensive. While these solutions are gaining more usage by the day, they remain vulnerable to manipulation and in most cases, a large percentage of borrowers are left out of the system.

Decentralized finance options seem to be an emerging solution however, the sector is riddled with overcollateralized platforms that further decrease access to working capital.

Sublime is a soon-to-be-launched decentralized credit system that solves the problem of over-collateralization as well as over-reliance on centralized credit scoring systems. Here is a primer on what the future of debt products will look like. 

What is Sublime?

Sublime is a DeFi native application built on the Ethereum blockchain and made up of a system of interacting entities that altogether make up a decentralized lending platform where borrowers can leverage their digital identities to access loans.

Instead of deploying a traditional highly centralized credit scoring system or using an overcollateralized lending and borrowing protocol as is the norm in most DeFi platforms, Sublime offers a solution that cuts both ways with a focus on personal connections, by allowing borrowers to use their social media profiles to borrow from lenders that trust them.

This makes it possible for users to stack up their reputation in an organic yet decentralized manner. They can even go further using NFTs and other blockchain-based assets as collateral on Sublime.

How does Sublime Works?

At its core, Sublime operates as a network of entities that effectively crowdsources credit scoring through individual user feedback. Loans can exist in pool-based structures where multiple lenders satisfy a single loan request or there is also the option of a peer-to-peer lender and borrower interaction through a credit line.

Sublime features a customizable design of debt products in a composable framework that allows third parties to leverage their open-source platform for various purposes.

Its flexibility allows institutions acting as lenders on the network to potentially implement extra KYC for their borrowers or simply work with other whitelisted institutions only in an anonymous on-chain interaction. Decentralized autonomous organizations (DAOs) on the other hand can raise debt publicly from their community.

Just as miners on a Proof of Work network verify the validity of transactions, Sublime is designed such that special entities called Verifiers decide whether an identity mapping is valid or not. Initially, the Sublime Foundation will provide verification but over time will onboard new verifiers to the network to provide verification for other forms of digital identities to the network. As the platform grows, more roles will shift to the governing committee of the ecosystem.

More than a DeFi Borrowing and Lending Protocol

Sublime goes beyond its decentralized credit scoring scoring system and debt protocol to offer other financial services such as decentralized savings accounts. Given the fact that Sublime is integrated with top DeFi protocols such as Aave and Compound, users can deposit their collateral locked in pools across the DeFi landscape and use that collateral to earn interest from within Sublime. This allows users to multiply the amount of yield they can generate thus adding an element of capital efficiency.

Conclusion: A New Era in the DeFi Lending and Borrowing Sector

Sublime is on track to bring its vision to reality given the fact that the startup has already raised $2.5 million in funding from backers such as FinTech Collective, Ryan Selkis, Electric Capital, Galaxy Digital, Collab+Currency, and Jill Gunter. 

At its core, Sublime is facilitating a new decentralized form of risk assessment for lenders while allowing borrowers easy access to loans at much lower costs. Going forward, Sublime plans to launch the alpha version of its platform and follow it up with other rounds of fundraising. 

While speaking at a press release, Sublime’s founder Ritik Dutta showed his excitement about the coming launch and remarked about how Sublime’s approach could potentially help solve issues with credit even beyond DeFi.

In the coming weeks, Sublime plans to begin its alpha thus giving select users a chance to start using its platform.

Indonesia’s Central Bank Considers Issuing Digital Currency to ‘Fight’ Crypto

Bank Indonesia, the country’s central bank, is reportedly considering issuing a central bank digital currency (CBDC) to fight the use of cryptocurrency. “A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto,” said an assistant governor of the central bank. Central Bank Sees::Listen

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Bank Indonesia, the country’s central bank, is reportedly considering issuing a central bank digital currency (CBDC) to fight the use of cryptocurrency. “A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto,” said an assistant governor of the central bank.

Central Bank Sees CBDC as Tool to ‘Fight Crypto’

Juda Agung, an assistant governor of Bank Indonesia, the country’s central bank, talked about cryptocurrency and central bank digital currency (CBDC) during his parliamentary “fit and proper test” to become the deputy governor of the central bank.

He said that Bank Indonesia wants to issue a digital rupiah to be used as legal tender to fight cryptocurrency, Bloomberg reported, noting that the central bank has been looking into this issue since the beginning of the year.

In Indonesia, crypto assets are traded alongside commodity futures and are regulated by the trade ministry, the assistant governor explained. However, he emphasized that they have a significant impact on the country’s financial system, elaborating:

A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto. CBDC would be part of an effort to address the use of crypto in financial transactions.

According to the trade ministry, about 7.4 million Indonesians invested in crypto assets as of July, doubling from last year. Their crypto transactions totaled approximately 478.5 trillion rupiahs ($33.3 billion). The Indonesian government is pushing forward with plans to set up a dedicated crypto exchange.

Meanwhile, Indonesia’s Ulema Council (Majelis Ulama Indonesia or MUI), the country’s top Islamic body that holds the authority on Shariah compliance, recently declared the use of cryptocurrency haram, forbidden under Islamic law for Muslims.

What do you think about Indonesia’s central bank wanting to issue a central bank digital currency to fight crypto? Let us know in the comments section below.

Bitcoin News
Regulation, Bank Indonesia, CBDC, cbdc vs crypto, cbdc vs cryptocurrency, Central Bank, indianesian central bank, indo, Indonesia, Indonesian, Indonesian central bank, legal tender

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Sublime: A Decentralized Credit System Leveraging Social Capital

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