ZeroFi

Unsecured borrowing is an important tool in the traditional financial world. It enables the development of companies, personal projects, the financing of individuals who do not have access to significant capital, etc. ZeroFi offers an implementation solution to bring this powerful tool on-chain.

ZeroFi is a SocialFi application that facilitates uncollateralized borrowing. The protocol aims to create a financial social graph encouraging virtuous behaviors. Collateral is replaced by a social link, legitimacy built over time, a risk management model and financial incentives.

The application has two components; a lending-borrowing protocol with different tranches and a financial social graph.

At the center of this protocol is the dynamic Credit Line. This Credit Line evolves based on on-chain actions and social recommendations. The calculation model of this Credit Line takes into account potential negative externalities, defaults, or attack attempts to ensure the system's solvency. This risk model aims to attract the right elements, reward users who are beneficial to the system and distance those harmful to its growth. The protocol takes into account and adjusts various financial parameters to ensure the maintenance of a virtuous circle. For example, a user recommending bad payers will see not only their decision-making power greatly reduced but also their benefits decreased or even completely canceled. In contrast, a user who has proven to be beneficial to the system will see their weight increased, along with their financial rewards.

A user can thus take uncollateralized loans, recommend their acquaintances and benefit from their willingness to repay. Virtuous users therefore have an interest in adding other virtuous users to their financial social graph. The risk management model, taking into account numerous parameters (borrowing history, social connections, sybil-proof attestations, etc.), helps maintain the system's good health.

Smart Contract Development: We initiated the project by establishing a smart contract infrastructure for the pools and lending system using ERC-4626, a custom Ethereum token standard. This standard allowed us to define the rules and functionalities of our smart contract.

Frontend Development: For the user interface, we opted for Next.js. To enhance the visual design and user experience, we harnessed the power of Tailwind CSS and Shadcn. This combination allowed us to create an aesthetically pleasing and user-friendly interface.

Backend Architecture: On the server side, we utilized Express.js. Express provided a solid foundation for building the backend logic and handling various API requests, ensuring smooth communication between the frontend and the underlying databases and smart contracts.

Database Management: We integrated Supabase. It provided real-time data synchronization and a scalable database solution, streamlining the development process and enhancing the overall project efficiency.

Noteworthy Hacks: While we aimed for a clean and efficient development process, there were a few notable hacks that deserve mentioning. One of these might be our innovative use of ERC-4626, a custom token standard. This choice allowed us to tailor token functionality to our project's specific needs, possibly simplifying certain processes and improving overall performance.