What is Creditcoin?

Creditcoin is an L1 infrastructure protocol co-founded by Gluwa and Aella, with investment from DWF Labs. It is a decentralized and interoperable marketplace for RWA (Real World Assets) credit lending and matching. It is built on the Parity Substrate framework and uses the NPoS (Nominated Proof of Stake) consensus mechanism. Creditcoin leverages the immutability of blockchain to create and record credit transaction events, assisting investors and fundraisers in verifying and assessing risks. Both individual and corporate investors and fundraisers can publish lending needs on the Creditcoin network platform.

The main reasons for establishing the Creditcoin credit investment blockchain are as follows:

• Disintermediation: Directly connecting lending needs, allowing both parties to achieve better profits and making microloans feasible.
• Decentralization and Public Ledger (Credit History): This allows for diverse credit scoring systems, helping investors find markets that suit them better.
• Creating a Sustainable Cryptocurrency Ecosystem: Enabling basic financial services like storage, payment, and investment to operate healthily and autonomously.
• Security: Allowing shared ledgers instead of centralized institutions managing personal information, thus reducing the risk of massive data leaks due to hacking.

In summary, the Creditcoin protocol aims to build a decentralized, secure, and efficient lending platform using blockchain technology. Through the platform, all transactions and credit histories are permanently recorded on the blockchain, which not only helps people who cannot open bank accounts locally accumulate credit but also allows the general public to build credit and evaluate investments through the Creditcoin platform.

Creditcoin ($CTC) current trading information can be found on Gate.io.

How Does Creditcoin Work?

Infrastructure

As a Layer 1 (L1) independent blockchain network, Creditcoin adopts a blockchain-agnostic design concept. This allows Creditcoin to be interoperable and operational across multiple blockchain platforms without relying on any specific blockchain technology, thus providing greater flexibility and scalability.

Based on this concept, Creditcoin leverages technologies such as the Parity Substrate framework, Nominated Proof of Stake (NPoS) consensus mechanism, cross-chain interoperability, smart contracts, decentralized applications (DApps), and security and privacy protection to achieve its goal of a decentralized credit network.

• Underlying Framework: Parity Substrate: Parity Substrate is a modular framework that allows developers to construct blockchain networks based on specific requirements. Developed by Parity Technologies, it comes with many built-in features and tools, such as consensus algorithms, identity verification, security, and scalability. Substrate also supports customizing various consensus mechanisms and economic models, making it widely used in various types of blockchain projects, ranging from public chains to enterprise-grade private chains.
• Consensus Mechanism: Nominated Proof of Stake (NPoS): Also known as “Nominated Proof of Stake,” Creditcoin uses the NPoS consensus mechanism to incentivize validators and nominators to participate in block validation and generation, ensuring the secure and decentralized operation of the network.
• Infrastructure: Gluwa provides the initial validators and infrastructure for Creditcoin on Azure’s Ubuntu virtual machines. Creditcoin’s runtime environment is in WASM binary format, with Rust as the primary development language. The staking dashboard and client command-line interface use Typescript.
• Cross-Chain Interoperability: Universal Gateway DAO: The Gateway DAO ecosystem is a permissionless cross-chain bridge ecosystem known as the “gateway.” Each gateway is managed by the Gateway DAO to ensure maximum transparency and decentralization.

Bridging is achieved through peg/unpeg smart contracts, which facilitate cross-chain digital asset or data transfer between different L1 and/or L2 chains. This enhances the scalability of the transaction network, democratizes network effects, and increases liquidity in the Real-World Asset (RWA) ecosystem.

Related Knowledge:

“What is Nominated Proof of Stake (NPoS)?” - Gate Learn

“What is Blockchain-Agnostic?” - Gate Learn

Ecosystem Overview

The Creditcoin ecosystem primarily provides a decentralized credit lending platform that connects investors with fundraisers who need capital. The entire ecosystem revolves around investment and fundraising. All transaction fees generated on the Creditcoin network are paid with Creditcoin tokens (CTC). Below is an overview of the ecosystem’s operation process:

Fundraiser Process

Fundraisers (borrowers/fundraisers), whether they are businesses or individuals, conduct fundraising through the following steps:

1. Seek Loan Quotes: The borrower creates a bid that describes the desired loan terms and publishes it.
2. Create a Bid: Provide detailed information on the lending conditions, including the amount, interest rate, and term, and pay the transaction fee.
3. Find Investment Quotes: Select from the list of quotes that meet the criteria provided by investors.
4. Create a Transaction: After finding a suitable investor, both parties complete the transaction, which is recorded on the blockchain.

Investor Process

Investors (lenders), whether they are businesses or individuals, participate in loan investments through the following steps:

1. View Bids: Browse the borrower’s bids and choose suitable borrowers based on their investment criteria.
2. Provide Quotes: Create and submit investment quotes that meet the conditions of the bid.
3. Confirm Transaction: After reaching an agreement with the borrower, confirm and complete the transaction, and record the transaction details on the blockchain.

The lending process is relatively straightforward. However, due to its decentralized nature, investors and fundraisers must complete registration and verification before creating orders. Borrowers must also provide credit information assessments and collateral before setting loan terms and paying handling fees. Only after the platform approves the order will it be published on the platform. Both investors and fundraisers need to pay transaction fees.

In certain cases, fundraisers can negotiate with investors for partial repayment or exemption from repayment conditions.

Supported Chains & Tokens

• Ethereum
• Stacks
• Flow
• Aurora
• Arkadiko
• Horizen
• Polygon
• Tron
• Cripco

Creditcoin Core & Economic Mechanism

$CTC is the project token of Creditcoin and the utility token within its ecosystem. According to CoinMarketCap, the total supply of $CTC is 549,570,839 CTC, with a maximum supply of 600,000,000 CTC. Below is the $CTC token distribution chart:

Source: Coincarp

The core mechanism of Creditcoin revolves around building a decentralized credit network and providing transparent and secure credit history records. In terms of token economics design, Creditcoin incentivizes network participants, including investors, fundraisers, and operators (validators), through the following elements:

• Transaction Fees: When conducting transactions on the platform, users must pay $ CTC in transaction fees. These fees cover the costs of network operation and maintenance and reward the validators.
• Collateral: Borrowers need to provide collateral to demonstrate their repayment ability. These collateral assets are locked in a smart contract until the loan is fully repaid. Each validator must also provide a certain amount of $CTC to participate in block validation and generation.
• Reward Mechanism: Validators and nominators who participate in block validation and transaction processing will receive corresponding $CTC rewards. This helps maintain the network’s security and stability.
• Penalty Mechanism: Borrowers who fail to repay on time forfeit their deposits, which will be recorded in their credit history and affect their future borrowing capacity. Validators who engage in misconduct will also face $CTC token penalties.

Creditcoin Token $CTC

$CTC is the utility token within the Creditcoin ecosystem, used for paying transaction fees, incentivizing network participants, and serving as collateral in lending transactions.

CTC (Mainnet) and CTC (ERC-20)

The CTC token exists in two forms, which can be seen as two sides of the same coin: Mainnet CTC and Ethereum-based ERC-20 tokens. The ERC-20 tokens were primarily used for early fundraising and distribution. As the Creditcoin mainnet launches and matures, the transition to Mainnet CTC will gradually occur. The following two diagrams illustrate the dual nature of $CTC.

Source: Creditcoin Whitepaper

Frequently Asked Questions about Creditcoin

What is the relationship between Gluwa, Aella, and Creditcoin?

Gluwa is the technology provider for Creditcoin. It is responsible for development on behalf of the Creditcoin Foundation and offers backend wallet services and other common infrastructure to members of the Creditcoin ecosystem.

Aella is a leading credit and fintech company in Nigeria and the first institutional user of the Creditcoin blockchain. In June 2022, Aella integrated its business with Creditcoin through Credal.

What is the total issuance of $CTC tokens?

There is no upper limit on the maximum supply. The issuance rate is 2 CTC per block, approximately 8 CTC per minute. The Creditcoin blockchain explorer can view on-chain data, the inflation rate, and total supply. Also, remember that $CTC fees used in transactions are burned, reducing the overall supply.

How does Creditcoin enforce repayment and/or penalize defaults?

Creditcoin is a reputation ledger that relies on reputational incentives to encourage repayment. If a party fails to repay the agreed interest at the agreed time, the Creditcoin network simply records it as a failed repayment, thereby damaging the party’s credit score. However, this does not mean that Creditcoin loans are unsecured. Creditcoin can be combined with off-chain enforcement mechanisms (such as legal agreements) or on-chain smart contracts that enforce repayment. Nevertheless, Creditcoin itself does not impose penalties for defaults other than reputational damage.