Proper risk modeling is an urgent need in the blockchain industry. Common DeFi practices such as crypto loans are currently overcollateralized by necessity since there is no way to determine any individual user’s credit. This is why platforms such as Credmark are creating tools that could change the current paradigm, unlocking new opportunities for the space.
Addressing data interpretation issues within DeFi and building retail focused risk tools is an important value proposition that is recognized by many. The project recently completed a $5.5 million raise that included Genesis Block Ventures, Spark Digital Capital, and Solidity Ventures as investors. It also announced a partnership with API3 ahead of its IDO.
As a decentralized risk modeling platform, Credmark provides data integrity and institutional grade risk tools for retail users by aggregating and normalizing public and proprietary information from large platforms such as BlockFi, Celsius, and NEXO. These are then shared as quarterly Crypto Credit Reports. CSO Momin Ahmad recently told Coindesk that “in order to get to a point where you can do true, peer-to-peer, permissionless, under-collateralized lending, you need to make sure that the data interpretation is a little more robust.”
The team has announced the launch of its first tool of this kind, one that is designed to create ranges on Uniswap V3 pools and invest funds accordingly. Credmark has such confidence in its understanding of the protocol that it will launch its CMK token on it as an innovative Liquidity Swap Drop on June 15. By employing its own risk models, the project is set to mitigate downside risk and make the most out of V3’s concentrated liquidity aspect and its effect on correlation of assets. This same portfolio management tool will now be available to retail users.
Credmark is betting that proper risk management will accelerate credibility and adoption of the blockchain and cryptocurrency industry and, more importantly, the potential in DeFi applications. Advisor Serge Ugarte believes giving risk modeling tools to retail investors is necessary in order to “scale the ecosystem and have a chance of competing with centralized alternatives.”
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