TransUnion recently announced it will make off-chain credit data available on public blockchain networks through Spring Labs’ ky0x Digital Passport, which enables Web3/Decentralized Finance (DeFi) applications or smart contracts to access off-chain identity, compliance, credit, and other custom data with lines of code. “The move enables better-informed, privacy-preserving DeFi and Web3 applications (internet applications based on public blockchains), unlocking a new world of permissioned and reputation-based products and features,” the companies said in their news release.

According to Spring Labs, the Ky0x Digital Passport allows users to provide information about themselves in order to access permissioned smart contract applications, while preserving the privacy of their off-chain identity. In their press release, the companies said Spring Labs’ research and development of privacy-preserving technologies has led to a system that allows its users to have control of their data, while preserving their privacy and anonymity. Users opt in and provide permission to have their credit data attached to their wallet(s), and never need to reveal their identity and personally identifiable information when affirming their reputation and credit history to DeFi applications and services. “We want to foster greater trust in DeFi products and services, so we created the tool suite that makes available off-chain reputation (e.g., KYC/AML, credit) data on public blockchain that preserves the user’s privacy and anonymity,” Spring Labs CEO John Sun said. According to Sun, “With TransUnion’s identity and credit data, we’re providing the first building block to bringing reputation on-chain, in turn helping create a more efficient DeFi lending environment that can offer better loans, more available liquidity, and ultimately accelerate adoption in the space.”

TransUnion and Sun believe that, with VantageScore credit scores on-chain, users can improve the rates that they are being offered by DeFi lenders, and DeFi lenders can reduce their own risk, all while increasing their available liquidity. “Enabling access to an industry-standard, trusted credit risk score like VantageScore on-chain and in a consumer permissioned, anonymous way opens the door to greater growth and financial inclusion in the DeFi space. Paired with ky0x’s AML and KYC capabilities, DeFi lenders can transact with confidence at lower rates, potentially paving the way for lending without the over-collateralization that is standard today,” according to Liz Pagel, SVP Consumer Lending Business Leader at TransUnion.