3Jane has bypassed the barriers to unsecured loans by leveraging existing fiat-to-crypto access infrastructure.
Author: Alea Research Daily Newsletter
Translation: Deep Tide TechFlow
The DeFi (Decentralized Finance) money market was once considered a true revolution that could disrupt certain key areas of traditional finance. Although on-chain lending continues to thrive, its consumer base and institutional penetration have not reached the initial expectations of some.
The biggest obstacle to further growth in DeFi lending may not be user experience, smart contract risks, or other factors, but rather the inability to achieve low-collateral or unsecured loans. Whether it’s a salaried individual applying for a mortgage or a large company borrowing to complete an acquisition, it is crucial for borrowers to access funds exceeding the value of their collateral.
Traditionally, unsecured loans in the cryptocurrency space have almost reached a mythical status. If decentralized protocols cannot access users' credit information and provide guarantees, it becomes difficult for users to prove their credit scores or repayment capabilities.
3Jane has proposed a new approach to the unsecured loan issue, combining elements of CeFi (Centralized Finance) and DeFi. In today’s article, we will interpret the 3Jane whitepaper released yesterday, discussing how unsecured loans could change the on-chain market and other related topics…
The Current State of Unsecured Loans
The unsecured credit industry is a market valued at nearly $12 trillion. In DeFi, this market is almost non-existent, especially on the retail side. While protocols like Maple Finance and Goldfinch provide loans to institutions through DeFi smart contracts, this market remains small.
In the centralized cryptocurrency space, lending has yet to recover to the peak levels of 2021. Major players like Celsius and Genesis OTC (over-the-counter) once provided unsecured loan services to big players in the field. This trend abruptly halted in 2022 and has yet to recover. While this may be beneficial for ensuring relative stability and sustainability in the current cycle, it still leaves a market gap that needs to be filled.
When it comes to mainstream assets and those with larger market capitalizations, institutional lending remains a necessary factor for maximizing liquidity flow. However, if unsecured loans can be realized on-chain, it could have a significant impact on the on-chain market. If solutions like 3Jane can work as expected and gain wider adoption, it could lead to a major breakthrough in DeFi lending.
Background of 3Jane
3Jane has bypassed the barriers to unsecured loans by leveraging existing fiat-to-crypto access infrastructure. Since the last cycle, the user experience in cryptocurrency has quietly improved significantly, one of which is the ease of access. Plaid provides API services that allow users to connect their bank accounts to fintech applications like Robinhood and others.
Plaid is the initial way 3Jane connects off-chain reputation with on-chain Ethereum addresses. In terms of user privacy, zkTLS is used to securely transmit off-chain data to the Jane3 protocol.
Collateral is not handled on-chain but is managed by an off-chain algorithm that adjusts based on the borrower's risk before presenting loan terms. Factors affecting credit scores include the user's wallet balance, potential DeFi activities, bank balances, and expected income, along with credit data related to associated bank accounts. Plaid itself does not extract credit records; this is done through other providers.
Once all factors align, loans can be issued. The way it works is that fund providers deposit their USDC to mint 3Jane's native USD3 or sUSD3 and take on the risk of certain credit limits. Loans on 3Jane are completely unsecured, making repayment a critical step; failure to handle this properly could lead to a reduction or complete loss of funds for the providers.
Outstanding debt on 3Jane is essentially treated like credit card debt or other types of unsecured debt, and failure to repay may result in a drop in credit scores and face collection threats. In the case of 3Jane, the protocol auctions the debt to collection agencies in the U.S. These agencies will receive a portion of the collected debt, with the remainder going to the original fund provider.
Given the international nature of cryptocurrency, it remains unclear how strong these measures are in deterring defaults and whether fund providers feel reassured by them. Nevertheless, this is an interesting example of on-chain actions leading to off-chain consequences, a situation that typically only arises outside of high-profile bankruptcies or exploit events.
3Jane's self-declared user base includes individual traders, miners, enterprises, and even AI agents. This means the service is primarily suited for asset-rich users, which may provide more reassurance to fund providers, and it would also be easier to collect if these users fail to repay.
Users can delete their personal data from the platform after repaying their loans; if users fail to repay, this data is crucial for collections. Subsequently, this data will be shared with specific collection agencies bidding on certain outstanding loans.
Overall, 3Jane offers a unique approach to solving the unsecured loan problem. Even if in practice it primarily serves ultra-high-net-worth individuals (UHNWIs) or institutions, which is not much different from the centralized unsecured loans we have seen in the past, 3Jane still provides an interesting case for the possibilities in the cryptocurrency space regarding ZK technology and Web2 integration.
Important Links
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
