The crypto lending market is at a crucial point. Currently, the entire un(der)collateralized lending space in crypto relies heavily on self-reported claims by borrowers. These claims range from unaudited financial statements and screenshots (of bank or exchange accounts) to PDFs and proprietary slack bots reporting balances. Diligent credit underwriters find it extremely challenging to assess borrowers and make informed lending decisions. Given the series of fraudulent events in 2022, confidence in these traditional "proofs" has plummeted. As a result, many lenders have either ceased un(der)collateralized lending altogether, drastically reduced their capital allocation, or redirected their capital exclusively to counterparts like Flow Traders or Galaxy, which are publicly listed and thus inherit trust from their quarterly audited financial statements. The rest of the market participants are left without a means to credibly demonstrate their balance sheets — not to mention performance or risk parameters — and prove they are reliable counterparts for lending.
At Accountable, we challenge the status quo by starting with a fundamental yet often overlooked question: Do you have the money?
Until now, borrowers had no way to conclusively prove ownership of the assets they claimed, providing little assurance to lenders. With the Accountable V1, you can demonstrate your asset ownership across all relevant venues — from banks and custodians to CEXes and hardware wallets. We provide our users with the means to verify their comprehensive "net worth" components live and display their venue and asset type concentration. While this might not seem like a revolutionary step to some, transitioning from "trust me bro, I have the money, everything is going to be alright" claims to verifiable and live balance ownership is a significant advancement for the entire lending space.
However, let’s temper our enthusiasm. While this is a breakthrough in our approach to the assets side of the balance sheet, it only tells part of the story. How much of these so-called assets truly belong to the borrowers, and how much constitutes liabilities?
What if the $100 million that a borrower reports from their Binance account is actually another loan from a different lender?
Accountable enhances communication between lenders, enabling them to signal the presence of third-party loans while preserving the borrower’s privacy. This signaling mechanism may only reveal a simple flag indicating whether a party has a loan, without disclosing specifics like terms, amounts, or currencies.
Lenders using Accountable will have access to signed APIs, allowing borrowers to easily retrieve and view their liabilities aggregated on their dashboards. This setup facilitates the inclusion of such data in reports sent to other parties. Moreover, we employ privacy-preserving verification methods, such as Merkle-Sum Trees and Zero-Knowledge Merkle Proofs, ensuring that liabilities known to lender A are accurately reflected in reports received by lender B.
To illustrate how Accountable approaches this problem, consider the following scenario where a borrower has a loan from Lender A and seeks a new loan from Lender B:
a) Fully Decentralized with Peer-to-Peer Communication