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Teller Finance integrates Chainlink ahead of unsecured lending protocol launch

By Pavithra R

September 07, 2020

  • Chainlink
  • Teller Finance
  • USA

Teller Finance, an algorithmic credit risk protocol built to enable the creation of decentralized lending markets, has announced its upcoming integration with Chainlink, a decentralized oracle network provider, ahead of its public alpha launch.

According to the integration plan, Chainlink will initially provide Teller with 3 cryptocurrency price feeds via its Price Reference Data oracle networks. These feeds will include USDC/ETH, DAI/ETH, and LINK/USD.

Teller creates money markets where users can earn interest on deposits or connect their credit history to borrow without collateral. The firm uses an open-source ‍credit risk protocol and, with its distributed cloud network, interacts with consumer data to calculate credit risk and offer unsecured loans. Users can supply liquidity to the protocol’s lending pools and earn interest from repaid loans. Teller uses borrowers’ credit history to calculate an annual interest rate (APR) based on market conditions vs. consumer credit risk, reducing or eliminating the need for collateral.

“Teller calculates consumer credit risk as a measure of personal financial data, e.g. debt to income ratio. The latter translates into an APR that is not only based on money market interest rate, but also takes into account consumer credit risk. Variable loan APRs in turn, result in variable APY for liquidity providers. For the consumer, this means an affordable user experience that leverages positive credit history to lower DeFi’s exorbitant collateral ratios,” said Ivan Perez, Founder & COO at Teller Finance.

The integration of Chainlink’s Price Reference Data feeds is expected to allow Teller to capture real-time price information on the protocol’s assets under management, ensuring that APR calculations for unsecured loans reflects real market conditions. Chainlink’s oracles capture this information off-chain from various high-quality data aggregators and make it available on-chain for any smart-contract-enabled blockchain. This allows Teller to leverage a decentralized network of independent, Sybil-resistant oracles to obtain volume-adjusted market data that is highly available, accurate, and resistant to various data manipulation attacks.

“We’re excited to empower Teller Finance with secure and reliable oracles so they can expand the already booming DeFi ecosystem through the introduction of undercollateralized loans. Lending accounts for more than 60% of DeFi’s TLV, and that’s just from overcollateralized lending options. Unsecured lending via consumer credit risk is the next major milestone towards truly capturing new users, and we’re excited to provide key oracle functionality to make that a reality,” said Daniel Kochis, Head of Chainlink Business Development.

Recently, Chainlink & LCX partnered to provide credible reference prices for cryptocurrencies.

Founded in 2020, Teller is an algorithmic credit risk protocol, built to enable the creation of decentralized lending markets that can offer unsecured loans. Following Chainlink’s successful integration, Teller will operate as a DeFi adoption bridge, enabling the acquisition of new users by lowering the industry’s entry barrier and maximizing consumer capital efficiency.

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