More about ZScore

ZScore is Zeru’s credit score system that is based fully onchain and ranges from 0 (weakest) to 1000 (strongest). Unlike TradFi credit scores such as FICO in the United States, ZScore is transparent & public, and applicable globally. This means that as well as being valid within Zeru for a range of different asset types such as ETH, USDC, or WBTC instead of being limited to a single fiat currency, it can be leveraged composibly by other protocols too. Each user’s ZScore is a SoulBound Token that is an indication of their reputation & creditworthiness, and is a reflection of the user’s interactions with & contributions to Zeru.

There are three main ways that users can grow their ZScore.

Borrowing history: Just like a TradFi credit score, responsible onchain lending activity through Zeru including timely repayments will be recognised with an increased ZScore.

Credit token balance: In a similar way, since increased activity within Zeru will result in a user growing their Credit Token balance faster, this will also lead to a higher ZScore.

Asset type: Borrowing “stable” assets such as those denominated in fiat currency such as USDT will increase ZScore faster than borrowing more volatile assets like ETH.

For users it’s simple, more activity within Zeru means a higher ZScore, which in turn increases the availability of Zero-Collateral Loans. But just like for a TradFi credit score, the reverse is true. Bad behaviour such as defaulting on loan repayments will result in a user’s ZScore being reduced. This mechanism helps Zeru to encourage responsible behaviour and facilitates secure ZCLs.