Unsecured Lending Agreement 3Jane: I want to make the encrypted version of "Jiebei", it is radical but not easy | Super early project attention

Author: Nianqing, ChainCatcher

Recently, the on-chain credit lending agreement 3Jane released a white paper. The content of the white paper shows that 3Jane is a credit-based money market that can achieve zero mortgage loans. Use zero-knowledge proof technology to verify the wallet address and bank account to provide credit loan quotas, and then use the method of fines and confiscation of credit points and auctioning default debts to practice risk control defaults for zero mortgage loans.

Although the unsecured credit market has become mature in traditional finance, in DeFi, it is still mainly based on excess mortgage lending, that is, the "bet 100 yuan and borrow 50 yuan". In addition, unsecured loan agreements such as Maple Finance and Goldfinch are already present, and are mainly aimed at institutions, market makers, etc., and it is difficult for ordinary users to borrow efficiently.

According to the white paper, 3Jane will create a credit-based currency market for peer-to-pool, supporting algorithms, real-time unsecured USDC credit lines, and providing funds for famers, traders, enterprises and AI agents.

Simply put, what 3Jane is doing is a very common credit loan product in traditional finance, such as the "Jiebei" in Alipay that uses the "Sesame Credit" score to obtain corresponding loans. However, in the encryption system that lacks support from centralized institutions, this product seems bold and radical.

At present, 3Jane products are still in the development stage, and the official has opened an application channel for early users and can fill in the relevant application early testing. However, it should be emphasized that the off-chain credit technology platform for 3Jane cooperates, such as Plaid, currently supports limited regions (such as the United States, Europe, etc.), and mainly supports the credit system of the United States. Therefore, in the early stages of the launch of 3Jane products, it may only support a small number of regions, and Asia and other places may be excluded.

3Jane How does it work specifically?

According to the white paper, 3Jane will eventually be built on the Ethereum ecosystem, with its target audience being crypto-native users (such as income farmers, traders, merchants, AI agents), relying on credit assessment of future cash flow, on-chain assets and credit scores to lend, allowing them to unlock capital efficiency through unsecured loans.

How does it work?

The lender deposits USDC and replaces it with USD3 (stable income) or sUSD3 (high returns but higher risks) and lends it to the borrower. The borrower completes on-chain and off-chain credit certification by connecting his wallet and bank account, obtains a credit score after a quick assessment of 3Jane, and obtains an unsecured credit limit.

How is 3Jane credit score obtained:

• On-chain: 3Jane evaluates on-chain credit through Cred Protocol and Blockchain Bureau, and comprehensively analyzes the borrowing, clearing, currency holding, exchange interaction and other behaviors on the EVM chain. Cred Protocol and Blockchain Bureau are both on-chain credit scoring tools that give encrypted users credit scores by analyzing on-chain data (such as your wallet transaction history). The two tools can cover more than 500 million addresses, 8 EVM chains, and more than 100 DeFi protocols, analyze a large amount of transaction data, and generate a credit score of 300-1000.

• Off-chain: Use zkTLS (zero-knowledge technology) to pull asset and credit data from off-chain (banks, Credit Karma) to protect privacy. Get Transunion, Equifax credit scores and Credit Karma records through ReclaimProtocol and EigenLayer (VantageScore 3.0, VantageScore 3.0 is a widely used credit score model in the United States, similar to "Sesame Credit Score") without providing a social security number in the process. In addition, 3Jane realizes fiat currency to cryptocurrency access by using existing infrastructure. Plaid is how 3Jane initially connected off-chain reputation with on-chain Ethereum addresses. Plaid provides API services that connect users' bank accounts with various financial applications.

3Jane Funding Market Structure

• Funding flow :
  • The deposited USDC is first placed on Aave V3 to earn the basic income and then distributed to the borrower.
  • USD3 is a token with high priority, and sUSD3 is a subprime debt, and the losses are borne first.
• Lending contract :
  • Based on Morpho Blue transformation, the mortgage logic is replaced with credit evaluation.
  • Interest rate = base interest rate (IR_Base) + risk premium (IR_DRP) + overdue penalty interest (IR_LP).

Privacy and transparency

• Privacy : Borrower data (name, phone number, etc.) is encrypted and sharded, and can only be unlocked to the collection agency when default is defaulted.
• Transparency : zkTLS Proofs allows lenders to audit the health of their borrowing pools.

How to prevent bad debts in an unsecured state?

1. Repayment incentives

• Credit Score Punishment :
  • If you don’t pay back the money, 3Jane’s credit score will be “cut”, and the borrowing amount will be low and the interest rate will be high in the future.
• Overdue income sharing :
  • The overdue penalty interest is distributed to other borrowers, and everyone is encouraged to supervise and repay.

2. Debt Auction (NPL Auction)

• process :
  • After the borrower expires, the credit limit enters a default state.
  • The on-chain Dutch auction was launched, and the US licensed collection agency bid to take over bad debts.
  • After the collection agency recovers the money, it receives a commission (such as 20%), and returns the rest to the fund pool.
• How to chase :
  • The collection agency uses TLOxp (debt tracking tool) to find someone, and can report it to the credit bureau to affect the borrower's actual credit, and can also go to court to force repayment.

3. Risk management

Bad debt valuation and deduction

• Dynamic write-down :
  • After default, the debt value is not immediately recorded as 0, but the market value after probability weighting is calculated using the formula (M(t)).
  • The formula takes into account the loss probability (L(t)) and recovery rate (R(t)) and decreases over time to avoid market panic.
• example :
  • It may be worth 50% when the contract is just defaulted, but it may drop to 10% after being delayed for a long time, and it may end up being 0.

Fund pool stratification

• USD3 : 85% fund pool, priority interest is obtained, low risk.
• sUSD3 : 15% capital pool, high returns but loss first, buffering the impact of bad debts.

Repayment rules

• Minimum repayment :
  • Monthly interest + part of principal is paid, but it will not exceed asset appreciation or cash flow.
  • There is a grace period (G_p), and the penalty interest will be increased if it expires. If it is not returned, it will be auctioned.
• Assure :
  • The repayment is linked to the borrower's actual income, reducing the risk of being unable to repay.

4. Credit Filter

• threshold :
  • 3CA algorithm comprehensives assets, cash flow and credit scores, and refuses loans directly if they fail.
  • Use zkCoprocessor to prevent fraudulent addresses (Sybil attack).

3Jane team background and development status

3Jane was founded in 2024 by 3yakov (@_yakovsky), who worked at Ribbon Finance for three years, initially joined as a smart contract engineer before moving to a growth strategy. Except for the founder, no other team members have disclosed information.

At present, 3Jane products are still in the development stage, but according to the official website, it has received support from institutions such as Coinbase, Lagrange, Reclaim, CRED and EigenLayer. Circle Lianchuang and CEO Jeremy Allaire commented on 3Jane that “the idea of ​​3Jane’s artificial intelligence-driven real-time unsecured USDC credit is very cool.”

Current status of on-chain unsecured lending

Crypto-unsecured lending is a new direction for DeFi development. This field is still in the early stages due to difficulties in risk management and relatively complex technical implementation. Some existing protocols include Goldfinch, TrueFi, Maple Finance, etc.

Goldfinch focuses on lending to real-world people and businesses, such as small businesses in developing countries. Goldfinch introduced a decentralized auditor approval mechanism for borrowers' credit review, which is relatively inefficient in funding; TrueFi focuses on on-chain credit loans, and uses community voting and credit scores to determine who can borrow money, and it does not necessarily have to be mortgaged. Most borrowers are institutions or entities with credit records, and their risk control is more subject to manual review; Maple Finance is an unsecured loan for institutions, and relies on professional teams to evaluate the borrower's credit. It is not completely decentralized. Borrowers need to provide financial statements, so there are privacy issues.

Overall, 3Jane is the latest and most radical attempt, and there are some optimizations based on the dilemma of the above protocol. But risk control is still one of the most core obstacles to crypto unsecured lending. Although 3Jane has set up a credit score punishment and debt collection system, how binding is it? The deterrent effect of on-chain credit scores is actually limited, after all, there are relatively few DeFi protocols that use credit scores. Furthermore, given the global nature of cryptocurrencies, it is not clear how deterrent this arrears are.

Take Goldfinch as an example. It has suffered three defaults , with the amount of default reaching tens of millions of US dollars. Multiple defaults highlight the difficulty of unsecured loans, and both lenders and the agreement themselves face huge risks.

(This article only introduces early projects and is not used as investment advice.)