The traditional finance world is centuries ahead of blockchain as far as its systems go, but blockchain technology offers new ways to do things related to finance only more efficiently. Loans in traditional finance come in many different ways, personal and credit cards are credit loans and mortgage and auto loans are based off of credit and collateral.
In the current infancy of defi all loans are collateralized, meaning you deposit one coin for the exact amount of another coin. This is to ensure that if the loan isn’t paid off by the end of the agreed terms on the contract, the company who loaned hasn’t lost out completely.
But the problem of defi loans is that not everyone has the necessary crypto funds to take out a loan and not everyone finds it most efficient to do so even if they did have the funds in the wallet. Enter Maple Finance, Masa Finance, and others, their vision is to bring the concept of uncollateralized loans based on credit to the blockchain ecosystem. A credit system would take the risk associated with the client and turn it into a number much easier to understand and approve instead of a long collateralized process. The funding that it would open up in the crypto space would flood money into the defi sector helping it to stabilize and grow.
These projects pre seed funding has been in the many millions and their companies look promising. Credit on blockchain would make the whole process of getting a crypto loan much faster and easier for everyone. Collateralized loans are slow and more expensive leading to headaches for the provider and the customer. By integrating a credit system on blockchains Maple Finance and others will be able to revolutionize the $11 Trillion global unsecured loans market. While none of these projects have truly scaled yet, the teams and support have been strong and have taken a much needed step to revolutionize and mature the defi system.