DeFi products promise financial inclusivity but struggle with on-boarding users lacking verifiable credit data.

The tension lies between needing rigorous risk assessment for protocol health and wanting to provide open-access lending, leaving millions trapped in financial limbo despite DeFi’s theoretical openness.

Current credit scoring in DeFi either leans on on-chain heuristics, which overlook off-chain behaviors and context, or require invasive data sharing, undermining privacy.

Regulatory uncertainty and interoperability issues deepen the gap, discouraging innovation focused on the underbanked segment.

Some DeFi platforms use basic on-chain data scoring, but these approaches miss significant off-chain credit signals and often penalize those without prior activity.

Others employ centralized third-party scoring, risking privacy breaches and demographic bias.

None fully address privacy, inclusivity, and decentralization in tandem.