When using risk management tools, the user is responsible for updating their preferences/position in the protocol they are using. This is not particularly great UX for end users because they are not in front of the computer 24/7 waiting to get a notification with their wallet unlocked.
In order to solve this problem, a proxy smart contract is proposed. This type of contract will be self-deployed by the user (non-custodial) and will be triggered by bots that get rewarded at the protocol level. This contract allows for their positions to be automatically updated whenever the Credmark models update.
The security of the proxy smart contracts is ensured due to the fact that the bots themselves do not input any information themselves. All they do is trustlessly trigger accessing the oracle data for a specific category of data models. For example, a proxy smart contract for liquidity of ‘Token A’ in Uniswap could be triggered by a bot when the risk of that token has changed outside of the threshold. This would result in the user liquidity ranges in Uniswap being updated to match the latest model results.
Some requirements and consideration to take into account for proxy smart contracts:
- The proxy smart contract needs to hold ETH or CMK to pay for the fees.
- The protocol fees for using Credmark also need to be paid but, as a security measure, those are capped at a maximum of 5%. This means that even if the governance of Credmark set a protocol usage fee of 10%, all the smart contracts previously deployed are going to only pay max 5%.
Credmark’s protocol has the potential to not only support decentralized protocols but also to support centralized protocols. This could be done through the usage of an Oracle and a smart contract where companies would have to stake CMK tokens to read information from the risk models.
Companies would willingly choose to do this because Credmark enables the democratization of risk models with a clear business model for data scientists. This is typically a very difficult job to monetize without major funding and building out large teams. As such, Credmark makes it easy for even college students to get started training 22 and building their own models, and potentially earning an income, thereby allowing the best talent to rise without companies requiring to jump through all the hoops of in-house training.
Credmark is also geared to pursue providing risk analysis data to companies working between the worlds of DeFi and TradFi. Meeting the requirements of both worlds is key, and as such Credmark will be using old-world tech (terms of service) when dealing with traditional companies, and will be using new-world tech (smart contracts) for interoperating with the DeFi protocols trustlessly. The Credmark Foundation will be built to deal with both sides of this equation and ensure that the well being of all users of the Credmark platform are respected.