Transforming DeFi Credit Delegation
Overview
GHO Forward was developed during the ETHGlobal LFGHO hackathon, a week-long event focused on AAVE’s GHO stablecoin. The project set out to address credit delegation risks within the AAVE ecosystem by enhancing borrower credibility through a hybrid credit scoring system that combined both on-chain and off-chain data. This innovative solution not only improved risk assessment but also advanced trust and transparency in decentralized lending. GHO Forward was recognized with the Family Pool Prize for its impactful approach. As the sole designer, I partnered with a team of three developers to bring the product from concept to prototype—creating a platform that merged cutting-edge DeFi functionality with an intuitive, user-first experience.
Challenge
AAVE’s native Credit Delegation feature faced several challenges due to the absence of standardized credit evaluation tools. Unlike traditional finance, which relies on established credit reports, AAVE lacked comprehensive mechanisms to assess borrower reliability, creating significant barriers for both lenders and borrowers. Key challenges included:
- Lack of Borrower Credibility Assessments: Without standardized systems for evaluating creditworthiness in DeFi, lenders struggled to assess borrower reliability.
- Risk of Bad Debt: Lenders lacked effective tools to verify borrower credibility, increasing the risk of bad debt.
- Trust Gap in Decentralized Lending: A lack of robust verification methods led to mistrust, hindering the credit delegation process.
- Missed Opportunities: Without credibility signals, borrowers faced reluctance from lenders to delegate credit, reducing capital efficiency and leading to greater financial risk.
- No User-Facing Interface: Although credit delegation was supported at the protocol level, the lack of a front-end made it inaccessible to users.
The hackathon provided an opportunity to address these challenges and design a platform that would enhance borrower credibility, mitigate lending risks, and make the Credit Delegation feature usable and practical.
Approach
To address the challenges of AAVE’s Credit Delegation, we focused on delivering a user-centric, feasible solution that built trust, ensured usability, and addressed technical constraints.
- Concept Definition: We defined core user scenarios and mapped key flows, aligning design decisions with technical feasibility from the outset.
- Feature Prioritization: The MVP was scoped around the most impactful features, focusing on hybrid credit scoring and streamlining the delegation flow.
- User Flows & Prototyping: We mapped separate borrower and lender flows, later unifying them into one streamlined journey to simplify role transitions. Low-fidelity wireframes helped align design and development.
- High-Fidelity UI Design: Once the structure was finalized, we refined the design with AAVE’s brand in mind, using a color palette combining AAVE’s purple with GHO’s green and choosing Clash Display and Inter for typography. The final UI prioritized visual appeal, user engagement, and brand consistency.
The process balanced trust-building, usability, and technical feasibility, ensuring the platform was intuitive, secure, and aligned with the AAVE ecosystem.
Solution
To tackle the risk and usability challenges surrounding AAVE’s Credit Delegation, I defined a focused product approach grounded in trust-building, usability, and technical feasibility. This centred around two key goals:
- Enhancing Borrower Credibility: To improve lender confidence, we integrated a hybrid credit scoring system that combined on-chain behavioral data with off-chain identity signals using Gitcoin Passport. This allowed borrowers to bring trust from both traditional finance and web3, providing a more complete and transparent view of borrower reliability.
- Creating a User-Friendly Interface: Since no front-end existed to support Credit Delegation, we designed an intuitive user interface from scratch. This interface included key elements like borrower profiles, delegation workflows, and risk indicators, transforming a backend protocol feature into a usable, accessible product.
Exploration of Additional Features: We explored NFT-backed borrowing as a potential future enhancement, where NFTs could be used as collateral, allowing borrowers to access liquidity without selling assets. Although not implemented during the hackathon, this feature remains a potential future direction for added security and flexibility.
Result
GHO Forward successfully created a blockchain-based platform that enhanced borrower credibility and mitigated lending risks within the AAVE ecosystem. By integrating on-chain and off-chain credit scoring, the platform empowers users to engage in lending and borrowing with greater confidence.
With a seamless and intuitive interface, the solution demonstrated how decentralized lending could be both impactful and user-friendly, paving the way for broader adoption and driving meaningful innovation across the DeFi ecosystem.
