Coinbase CEO says onchain reputation could replace credit scores

Coinbase CEO Brian Armstrong said onchain reputation could soon replace traditional credit scores. The FICO score is the three-digit rating behind 90% of top United States lending decisions. Armstrong made the comment in reply to Base creator Jesse Pollak. Pollak had highlighted progress in undercollateralized onchain credit. Base is Coinbase's Ethereum layer-2 network. FICO scores range from 300 to 850. Payment history and total debt drive 65% of a FICO score. Public ledgers record repayment history, wallet age, and counterparty behavior. Lenders can read the same onchain record. Crypto lending still relies on collateral. Galaxy Research found that crypto lending fell 17% to $56.16 billion in the second quarter of this year. Coinbase expanded its crypto lending efforts in February. Collateral backed every loan in that expansion. DeFi lending strategy layers package exposure into managed vaults. Bitcoin's ledger has recorded every transaction since 2009. Anyone can trace a wallet's age, balances, and counterparties. Bitcoin addresses do not reveal names. Users can create addresses at no cost. A borrower can abandon one wallet and fund a new wallet on the same day. Ethos Network ranks wallets partly through vouches from other users. Ethos describes its output as a summary of sentiment rather than proof of creditworthiness. Credifi uses that score. Credifi lends up to $3,000 against a score of 1,800 without requiring pledged collateral. In May, Armstrong listed eight areas where he said the financial system needed updating. Default rates over the coming months will show whether onchain reputation can price real risk.