Confirmed! MACRO Scores Accurately Predict Borrower Behavior
Confirmed! MACRO Scores Accurately Predict Borrower Behavior
Our first Capital Efficiency simulation looks at Aave V2 Ethereum borrowers, plus Modulus Labs, Jason Morton, Dante Camuto, and Daniel Kang talk to us about zkML
We have great news to report:
Last week, Spectral senior data scientist Margarita Kirakosyan completed our first capital efficiency simulation, proving Spectral’s MACRO Scores can accurately predict borrower behavior in a real-world setting.
Our first simulation used data from Aave V2 Ethereum borrowers to (1) validate whether differing groups of MACRO Scorers would perform as expected and (2) estimate how much low-risk borrowers would benefit given better collateral requirements.
With respect to borrowing on Aave V2, we found that MACRO Scores were an accurate measure of liquidation risk. High MACRO Scores users were liquidated less often than lower scoring users, were better at repayment, and kept healthier account balances. By giving them better terms, Aave borrowers could have enjoyed significantly better capital efficiency during the year we modeled.
Subsequent simulations will look at optimal risk parameters (such as collateral requirements, borrow interest rates, reserve factors, etc.), and apply MACRO Scores to lending club data to compare them to traditional creditworthiness assessment.
The State of Zero Knowledge Machine Learning
The Oracle Problem has been a serious risk with web3. How can you trust that a feed of price information on a decentralized application hasn’t been corrupted? Or, to use an example a little closer to home, how can you trust that Spectral is really using on-chain information and a sophisticated machine-learning algorithm without being able to see the details of it? In the past, you could not, but a series of technological breakthroughs involving a cryptographic technique known as zero-knowledge proofs have made it possible to verify that a complex model has been applied to blockchain data, quickly and cheaply.
Test drive our new Partner Dashboard
We’ve updated our website to a sleek new look and built a simple but powerful API interface that will allow you to access our data, including the MACRO Score’s constituent feature (i.e. Spectral Wallet Signals) for free or sign-up for a consultation. Have a look!