Short for Multi-Asset Credit Risk Oracle, MACRO score represents one's credit standing in Decentralized Finance (DeFi) and is calculated using many different pieces of on-chain transaction data. This data is grouped into five categories: payment history, liquidation history, amounts owed and repaid, credit mix, and length of credit history. While each of the categories are important in determining one's MACRO score, the precise importance of these categories may vary from one person to another.
A MACRO score is a number ranging from 300 (bad credit standing) to 850 (good credit standing). Naturally, information available on-chain may affect your MACRO score either positively or negatively. Prior history of liquidation will lower your MACRO score, but establishing a good track record of making repayments on your loans will raise it.
To avoid any bias creeping into your MACRO score, we utilize advanced machine learning algorithms and industry-standard statistical analysis of your past, quantifiable on-chain behavior and interactions with existing DeFi protocols instead of any preconceived judgment rules or policy criteria. This further ensures that our scoring methodology remains empirically sound and statistically valid.
Your on-chain transaction history is unique, and so is your MACRO score. While roughly based on the five categories mentioned above, calculating MACRO scores may involve some additional procedures depending on one's transaction history for some individuals. Moreover, note that MACRO scores may evolve quite frequently as on-chain information can change over time.
With the wealth of on-chain activity data available at our disposal, we consider a select subset of these data points that are highly correlated with your creditworthiness through rigorous statistical analysis. They can be broadly classified into the following 5 categories:
Transaction history. On-chain Ethereum (ETH) transaction history (which may or may not be related to DeFi protocols) publicly indicates who you have transacted with, the volume of ETH transacted, the nature of each transaction, etc. In a way, this history is one that effectively defines your on-chain identity and thus is substantially taken into consideration when calculating your MACRO score.
Liquidation history. Liquidation can conceptually be interpreted as a proxy for defaulting on a loan (which is a concept that doesn't yet exist in DeFi), or can at least be indicative of your risk management. As higher risk appetite translates to less trustworthiness or being more prone to speculative behavior when it comes to lending and borrowing, prior history of liquidation will lower your MACRO score.
Amounts owed and repaid. Having a high-volume borrow history per se does not necessarily mean you are a borrower with a high risk appetite and would be assigned a low MACRO score. As long as you maintain a good track record of making repayments on your loans and not overextending yourself, your MACRO score should be affected positively.
Credit mix. Calculation of your MACRO score also considers your mix of various ways in which you have interacted with preexisting decentralized finance protocols. It is not necessary to have interacted with an abundant number of protocols.
Length of credit history. Generally, a longer credit history will increase your MACRO score. If you have an address with old transactions, you should consider batching it on our platform with your current ones!