3. How FriendFi Works

FriendFi realizes a new financial system based on trust, centered around the following three pillars:

• Three Pillars

  • Tokenization of "Credit" by AI (Social Token): Users can issue personal credit tokens (e.g., $Satoshi) by participating in the decentralized SNS "EchoSphere" linked to FriendFi. AI agents analyze activities on EchoSphere (statements, connections, contributions) and on-chain activity to score an individual's "creditworthiness." The credit score is directly reflected in the value (price) of the individual's credit token.

  • C2C Lending Secured by Credit Tokens: The most significant feature of FriendFi is that users can directly lend to each other, using credit tokens as collateral. Users with high credit scores and credit token prices can receive loans under more favorable conditions.

  • Value Enhancement of Credit Tokens Through Lending: As lending secured by credit tokens becomes more active, the demand for credit tokens increases, leading to price appreciation. Repayment history of loans positively impacts credit scores, further enhancing the value of credit tokens.

• Detailed Explanation

  • Decentralized SNS "EchoSphere" and its Role: EchoSphere is a decentralized SNS that forms the core of the FriendFi ecosystem. Users can freely communicate, form communities, and engage in various activities on EchoSphere. EchoSphere serves as the foundation for nurturing users' "credit."

  • Mechanism of Credit Scoring by AI Agents: Virtuals Protocol's AI agents comprehensively analyze user activity on EchoSphere (content of statements, connections, contributions, etc.) and on-chain activity, and calculate a "credit score" using a proprietary algorithm. This score serves as an indicator of the user's creditworthiness.

  • Issuance and Trading of Credit Tokens (e.g., $Satoshi): Users can issue individual credit tokens (e.g., $Satoshi) based on their credit scores. These tokens can be freely traded on the FriendFi platform.

  • Process of C2C Lending Secured by Credit Tokens: Users who wish to receive a loan pledge their credit tokens as collateral and apply for a loan. Users who provide loans refer to the applicant's credit score and the price of the credit token to determine whether to provide a loan and under what conditions.

  • Role of AI Agents in Risk Management for Lending: AI agents constantly monitor credit token price fluctuations and user activity to prevent fraudulent activity and excessive risk-taking in lending.

  • Relationship between Loan Repayment and Credit Score: Repaying loans improves a user's credit score. On the other hand, if repayment is delayed, the credit score decreases.

  • Value Enhancement Cycle of Credit Tokens: Increased lending activity increases demand for credit tokens, leading to price appreciation. Price appreciation increases the collateral value of loans, creating a virtuous cycle that attracts even more lending.