# Crypto Lending with Proofs of Dynamic Assets Unlike traditional financial lending, most on-chain loans require collateral from users. In the traditional financial system, credit is a broader form of lending that doesn't necessitate collateral and is based on credit information. However, in the DeFi world, due to the characteristics of trustlessness, permissionlessness, and the lack of KYC, it becomes challenging for DeFi developers to restrict borrowers based on off-chain behavior. While many projects are exploring on-chain credit lending methods, it is undoubtedly a challenging task. The difficulty lies in how to lock off-chain assets and how to effectively recover them. Nevertheless, attempting to enhance the lending rate and asset utilization through a combination of dynamic asset proofs is worth considering. Providers of funds can request borrowers to provide proof of identity, assets, credit, etc., off-chain, and then conduct risk assessments based on on-chain data to increase the original lending rate (e.g., from 70% to a higher ratio like 75%). Simultaneously, borrowers are required to provide proofs of dynamic asset at an agreed frequency. When assets change within a specified range, repayment and liquidation will be triggered. From increasing lending rates to exploring on-chain microcredit lending, the utilization of combined on-chain and off-chain data presents an opportunity to innovate DeFi applications once again. In general, with zkTLS-based data proofs, offchain credit data including FICO scores, income statements, and payment histories can be securely verified onchain in a privacy-preserving way with arbitrary disclosure, and used for onchain credit score verification. Achieving credible onchain credit for our digital identities would enable a wide range of new DeFi products around personalized lending rates, dynamic collateral requirements, and risk-based interest models. Defaults would penalize onchain creditworthiness and reputation of the digital identity. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://nexaid.gitbook.io/nexaid/implementation-scenarios/crypto-lending.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.