Hybrid Credit Scoring
A three-layer composite scoring model that combines on-chain activity, off-chain verified data, and ecosystem reputation into a single institutional credit score ranging from 0 to 1000.
Scoring Architecture
The Dualis credit scoring system is designed for institutional participants who require a nuanced, multi-dimensional assessment of counterparty creditworthiness. Unlike traditional DeFi protocols that rely solely on collateral ratios, and unlike traditional finance that depends entirely on off-chain credit bureaus, Dualis combines three complementary data layers into a single composite score.
Each participant receives a score between 0 and 1000, which maps directly to one of five credit tiers. The score determines access to preferential lending rates, higher leverage, and under-collateralised borrowing facilities.
Three-Layer Composite Model
The composite score is derived from three weighted data layers:
| Layer | Weight | Data Source | Description |
|---|---|---|---|
| On-Chain Activity | 40% | Canton ledger | Direct observation of the participant's behaviour on the Dualis protocol — loan completions, repayment timeliness, volume history, and collateral management. |
| Off-Chain (ZK-Verified) | 35% | External credit data via ZK proofs | Traditional credit metrics provided through zero-knowledge proofs. Participants can attest to off-chain credit ratings, financial statements, or regulatory standing without revealing the underlying data. |
| Ecosystem Reputation | 25% | Canton Network ecosystem | Cross-protocol reputation signals from the broader Canton ecosystem, including participation in other DeFi protocols, governance activity, and network contribution metrics. |
Scoring Sub-Factors
The on-chain layer (40% weight) is decomposed into five sub-factors, each contributing a specific number of points to the total 1000-point scale:
| Sub-Factor | Max Points | What It Measures |
|---|---|---|
| Loan Completion | 300 | Number and value of loans successfully completed without default. Higher completion rates and larger loan values contribute more points. |
| Repayment Timeliness | 250 | Consistency of on-time repayments. Early repayments earn bonus points, while late repayments reduce the score. Defaults result in significant point deductions. |
| Volume History | 200 | Cumulative borrowing and lending volume over the participant's lifetime on the protocol. Demonstrates market engagement and protocol trust. |
| Collateral Health | 150 | Average health factor maintained across all active positions. Participants who consistently maintain well-collateralised positions earn higher scores. |
| Securities Lending | 100 | Participation in the securities lending marketplace, including lending volume, deal completion rate, and counterparty satisfaction. |
The five sub-factors sum to a maximum of 1000 points, reflecting the total on-chain contribution. The off-chain and ecosystem layers are normalised to the same 1000-point scale before the weighted average is computed.
Score Update Frequency
Credit scores are not static. The Dualis scoring engine recalculates scores based on the following triggers:
- Event-driven updates — Every significant on-chain event (loan completion, repayment, liquidation, securities lending settlement) triggers an immediate score recalculation for the affected participant.
- Periodic recalculation — A full recalculation across all sub-factors is performed every 24 hours to account for time-decay effects and updated market conditions.
- ZK proof submission — When a participant submits a new zero-knowledge proof for the off-chain layer, the score is recalculated immediately to incorporate the updated attestation.
Score to Tier Mapping
The composite score maps directly to one of five credit tiers, each unlocking specific protocol benefits:
| Tier | Score Range | Rate Discount | Max LTV |
|---|---|---|---|
| Diamond | 850 – 1000 | -25% | 0.85 |
| Gold | 700 – 849 | -15% | 0.78 |
| Silver | 500 – 699 | -8% | 0.70 |
| Bronze | 300 – 499 | 0% | 0.60 |
| Unrated | 0 – 299 | 0% | 0.50 |
For a full breakdown of tier benefits, collateral requirements, and liquidation parameters, see the Credit Tiers documentation.