⚡️ Friends, let me tell you about a friend's situation. A few years ago, he wanted to start a business, had no house or car, but his bank statements looked good. The loan officer took a quick look at his credit report and shook his head. In the end, he borrowed 50,000, with the condition of putting up an old house worth 300,000 as collateral.

Invest 300,000 and borrow 50,000. Anyone would find this outrageous. But guess what? Today's DeFi lending is even more outrageous than banks. Want to borrow 10,000? Sure, first deposit 15,000 worth of assets. Prices dropped? Add more collateral, or else you'll be liquidated. This isn't called lending; it's called pawning.

At least banks look at your income, check your credit, and consider how long you've been working. DeFi doesn't even know who you are. A wallet address might be you or a thousand robots. Why should they trust you?

So it can only use the most primitive method of collateral. The more you stake, the less I will lend to you. This protects the lender but restricts the borrower severely.

Data shows that currently, over 64 billion dollars are locked in on-chain lending, which sounds impressive. But if you look closely, nearly half of the loans on Aave are big players engaging in arbitrage games, borrowing and depositing, and playing with themselves. Ordinary users can't even get in.

Is there anyone trying to break this deadlock? Yes, and quite a few have emerged recently.

For example, Lista DAO launched Lista Credit in February this year, focusing on no collateral, small amounts, and short terms. You can borrow whenever you want, and if you repay on time, you can earn token rewards. Start with small amounts to test, low risk, and gradually cultivate users' repayment habits.

XRP is also working on a collateral-free lending system, claiming to launch in 2026. It will look at your transaction history on the blockchain and score you; if your score is low, it will directly freeze your permissions.

There’s also Creditlink, which uses AI to score your credit based on over 200 dimensions, looking at assets, behaviors, and risks.

But the logic is actually quite simple: since banks can judge you based on credit reports, why can't the blockchain judge you based on your wallet behavior? But the question is, is on-chain credit scoring reliable? To be honest, no one can guarantee its absolute reliability right now.

Harvard and UIUC have developed a system called zScore, which uses AI to analyze wallet behavior and found that people with high credit scores indeed default less. Ethos Network has taken a different approach, allowing community members to guarantee for you with real money; if you default, the guarantor will also be penalized.

These attempts have their flaws. How to protect privacy? Will the scoring be manipulated? What if no one guarantees in the early stages? But don't be quick to dismiss it. Technical issues have never been a dead end; it's just that the right path hasn't been found yet.

There is also a more pragmatic approach: off-chain assessment, on-chain settlement. That XRP proposal does just that; credit assessment is still entrusted to traditional institutions, but the lending contracts are executed on-chain. It's a compromise, but it works.

Ultimately, is this issue worth paying attention to? I think it is. The total on-chain lending volume increased by 37% in 2025. What does this indicate? It indicates that many people want to borrow money but are blocked by collateral thresholds.

AI is also rushing in. Some predict that in the future, there may be millisecond-level AI underwriting, where you click to borrow, and the AI calculates the risk within half a second, without needing collateral, and directly disburses the loan.

Does it sound like a pipe dream? A few years ago, we also thought that on-chain credit scoring was a pipe dream. The truly difficult problems are often the ones most worth solving.

Back to my friend. If his wallet address has been making normal repayments and stable interactions in DeFi for the past two years, do you think he deserves to be trusted?

Maybe we won't have to wait too long; someone on-chain will be willing to say to him, “Sure, I’ll lend you.”