Introducing Score Builder
As we covered in last week's post, the ARCx team have been laser focused on building the core infrastructure to support scoring for the benefit of Passport Holders and Partner Protocols. With the infrastructure largely built, our next priority was to operationalise scoring in a scalable way. With this in mind, we are excited to announce Score Builder, a configurable on-chain system that allows rapid score development on top of ARCx infrastructure.
In this post, we'll explain more about what Score Builder is, what value it can provide to Passport Holders and Protocols, and what to expect over the coming weeks and months.
What is Score Builder?
As mentioned, Score Builder is a system to rapidly design and deploy scores on top of ARCx infrastructure at scale. The scores themselves are highly configurable, meaning any on-chain event or attribute can be used to define the parameters. The flexibility of Score Builder means that a score, which could represent anything we (or our partner protocols) want, can be created and deployed to Mainnet in a matter of hours.
Score Builder is a foundational capability which unlocks both the short-tail (i.e. Native) and the long-tail (i.e. Protocol-Specific) opportunity simultaneously.
Native scores are created by ARCx and can be accessed by Passport Holders and Protocols out of the box. These scores are general utilities that take full advantage of our advanced data and risk modelling capabilities, and include the upcoming Credit, Trust and Global Governance Scores. The generalised nature of Native Scores is a short-tail opportunity, which we believe ARCx is uniquely positioned to drive the development of on behalf of the industry.
Protocol-specific scores, on the other hand, are developed in partnership with protocols individually, and deliver on specific use cases depending on their needs. One of the key insight which led us to create Score Builder is that every protocol has a unique and specific goal they want to achieve with scores. The bespoke nature of protocol-specific scores is a long-tail opportunity, but we believe it is hugely valuable one.
To further illustrate the value this creates, let's have a look at some use cases.
What value does this unlock for Protocols and Passport Holders?
Score Builder can unlock new and interesting use cases that build community, protect value, create utility and make using decentralised finance more fun. Here are a few examples that we think are quite exciting:
Loyalty Score (Protocol-Specific) - To drive community engagement and incentivise loyalty, a protocol could create a score which promotes using the product and staking tokens. Passport holders are incentivised to build and share their score as a social or reputational signal (similar to Roles on Discord). Protocols can further align interests by rewarding Passport Holders who have strong scores with NFT drops or other exclusive benefits and perks. We imagine through surfacing this information transparently, Protocols will be able to more effectively align the interests of their communities.
Governance Score (Protocol-Specific) - To improve governance participation, a protocol might create a score which surfaces how active a Passport Holder is in relation to DAO governance. Participation rates in DAOs can often be low, and the larger a DAO is, the worse this issue gets. Encouraging active participation in the voting process can improve the quality of debate, bring attention to the details of a vote, and even strengthen community ties.
Credit Score (Native) - To drive revenue while reducing risk exposure, a lending and borrowing protocol could use the Credit Score to offer personalised borrowing terms to Passport Holders. The relationship between a positive credit score and better financial deals will incentivise Passport Holders to act responsibly, which will in turn result in greater demand for borrowing and a reduction in credit risk industry-wide.
Trust Score (Native) - To reduce customer acquisition costs, a protocol could use the Trust Score to fairly distribute airdrop tokens in a way that avoids sybil attack. As we recently covered in the post Understanding the Ribbon Finance Airdrop, we found that had Ribbon removed ETH wallet addresses younger than 10 days old and with less than 5 tokens traded in total (a strong indicator of sybil attack), this would have saved Ribbon 27% of the RBN distributed in their airdrop.
Chad Score (Native) - To see, on a scale from 1 to Chad, how Chad-like your investments have been in decentralised finance, a Passport Holder can view a comparative score which they can share on Twitter and Discord. Did you buy ETH when it was under $100? Did you participate in the OlympusDAO IDO? Very Chad my fren. Well done ser. WAGMI etc.
This last one is an example of where scores can blur the line between meme culture and functional utility. We think both are important, and want to hear your ideas on scores we can create that make using decentralised finance more fun and rewarding.
Over the coming weeks and months, we will be creating scores and onboarding new partner protocols. In parallel, we are continuing to work on Native Scores, including our long-awaited Credit Score (no, we haven't forgotten about this!), as well as the killer app that will take full advantage of it, our borrowing product.