Ethereum Watch

DeFi lending project Teller Finance has announced its upcoming integration with Chainlink. The oracle provider will provide Teller with three cryptocurrency price feeds via its Price Reference Data oracle networks.

Teller to Offer Unsecured Crypto Loans

Teller is an open-source protocol that interacts with consumer data to calculate default risk and offer unsecured crypto asset loans.

Users can supply liquidity to the protocol’s lending pools and earn interest from repaid loans. Teller leverages borrowers’ real-world credit history to calculate an annual interest rate (APR) that is based on market conditions vs. consumer credit risk, reducing or eliminating the need for collateral.

To assist on the crypto side, Teller will leverage data from Chainlink’s DAI/ETH, USDC/ETH, and LINK/USD feeds, among others.

The market-leading oracle provider will allow Teller to capture real-time price information on the protocol’s assets under management, ensuring that all APR calculations for unsecured loans reflect real market conditions.

Chainlink’s oracles capture this information off-chain from numerous high-quality data aggregators and make it available on-chain for any smart contract-enabled blockchain.

Lower Collateral Requirements The Next-Step in DeFi

Teller Finance was designed to develop decentralized loan products, without collateralized debt, reducing consumer risk and costs. Teller can interoperate with traditional finance data, offering users the tools to develop a new suite of trustless financial instruments.

Ivan Perez, Co-Founder at Teller, said:

“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.”

Integrating Chainlink’s Price Reference Data will allow the protocol to ensure the accuracy of its pricing data. Undercollateralized lending is a positive next step for DeFi, according to Daniel Kochis, Head of Chainlink Business Development: 

“Unsecured lending via consumer credit risk is the next major milestone towards truly capturing new users, and were excited to provide key oracle functionality to make that a reality.”

Chainlink already provides highly secure and reliable oracles to large enterprises (Google, Oracle, and SWIFT) and leading smart contract development teams such as Polkadot/Substrate, Synthetix, Loopring, Aave, OpenLaw, Conflux, and many others.

Teller’s launch of undercollateralized loans marks an obvious, albeit brave, evolution of the DeFi sector, and one that could see it rapidly replace banking services as we know them.