CS 298 Proposal

CS298 Proposal

Credit score-based lending system on Ethereum Platform

Mayuri Shimpi (mayuripraveen.shimpi@sjsu.edu)

Advisor: Dr. Chris Pollett

Committee Members: Dr. Thomas Austin and Bhushan Sonawane

Abstract:

This research aims to develop a lending system on the Ethereum platform. This system integrates credit scoring used in the traditional banking system to assess borrower's risk of defaulting. This project focuses on implementing the Autonomous Lending system on the Ethereum Platform (ALOE), as proposed in [1], aiming to seamlessly integrate traditional credit scoring methodologies for evaluating a borrower's risk of default.

CS 297 Results:

  • Established the groundwork for developing smart contracts on the Ethereum blockchain platform utilizing Solidity. Throughout this phase, an in-depth exploration was conducted into Ethereum's decentralized system for electronic transactions, eliminating the need for a trusted intermediary.
  • Set up a local blockchain for testing and deploying smart contracts. This was accomplished using the Web3.js JavaScript library and Ganache, a tool simulating the Ethereum network.
  • Implemented the borrower registration phase, where borrowers disclose their real-world identity, including their social security number (SSN), to the credit bureau. The contract ensures secure and decentralized borrower initialization, credit score management, and confidentiality through encryption, with information shared only with designated auditors.
  • Lastly, we explored the implementation of the loan smart contract. A loan smart contract object is created by calling the creatLoan() method in the Credit Bureau Smart Contract.

Proposed Schedule:

Week 1: Jan 30 - Feb 6 Submit the CS 298 Project Proposal.
Week 2-3: Feb 7 - Feb 20 Research and implement the methods required to create a loan like invest(), borrow(uint amount), and withdraw(uint amount)
Week 4-5: Feb 21 - Mar 5 Implement methods to track and update the credit score
Week 6-7: Mar 6 - Mar 19 Complete the unit test cases to ensure the ALOE system behaves as expected.
Week 7-10: Mar 20 - Apr 09Establish different loan smart contracts and link borrowers and lenders to ensure the working of this lending system.
Week 10-12: Apr 10 - Apr 23Evaluate the system across multiple scenarios, including instances of loan default.
Week 13: Apr 24 - Apr 30Work on CS 298 Report and begin preparation for the Defense
Week 14: May 1 - May 7Continue working on CS298 Report and Presentation
Week 15: May 7 - May 14Finish CS298 Report and Presentation

Key Deliverables:

  • Software
    • In the ALOE System, the first part is implementing the Borrower Registration step to assign initial credit to an Ethereum address based on the user's real-world credit score.
    • The Credit Bureau Smart Contract of the ALOE system is responsible for registering the borrower and connecting lenders and borrowers.
    • The implementation of the loan smart contract that consists of methods like invest() and borrow(uint amount).
    • Enable borrowers to initiate loan requests through the system interface. Facilitate interaction between borrowers and lenders by providing functionalities for lenders to review and engage with loan requests. Ensure connectivity and communication between all parties involved in the lending process.
    • Unit test cases that verify the functionality of the implemented code.
  • Report
    • CS 298 Report
    • CS 298 Presentation

Innovations and Challenges:

  • The Autonomous Lending Organization on Ethereum with Credit Scoring, as proposed by [1], presents a novel approach to decentralized finance (DeFi) products. This approach involves the implementation of smart contracts for the registration setup, Credit Bureau, and the loan process.
  • Overcoming technical challenges in setting up a local blockchain environment for testing and deployment, including utilizing Web3.js JavaScript library and Ganache for simulation.
  • Addressing security and privacy concerns related to the encryption and sharing of borrower information with designated auditors, ensuring confidentiality and compliance with regulations. To address this challenge, thorough testing of the system's functionalities will be conducted.

References:

[1] T. H. Austin, K. Potika and C. Pollett, 'Autonomous Lending Organization on Ethereum with Credit Scoring,' 2023 Silicon Valley Cybersecurity Conference (SVCC), San Jose, CA, USA, 2023.

[2] G. Wood, "Ethereum: A Secure Decentralised Generalised Transaction Ledger, EIP-150 Revision," Ethereum & Ethcore, gavin@ethcore.io

[3] C. Busayatananphon and E. Boonchieng, 'Financial Technology DeFi Protocol: A Review,' 2022 Joint International Conference on Digital Arts, Media and Technology with ECTI Northern Section Conference on Electrical, Electronics, Computer and Telecommunications Engineering (ECTI DAMT and NCON), Chiang Rai, Thailand, 2022.

[4] L. Andolfo, L. Coppolino, S. DAntonio, G. Mazzeo, L. Romano,M. Ficke, A. Hollum, and D. Vaydia, 'Privacy-preserving credit scoring via functional encryption,' in International Conference on Computational Science and Its Applications, 2021

[5] 'The solidity contract-oriented programming language.' https://github.com/ethereum/, accessed November 2020.