Zeru Finance is excited to share that we have chosen to build zScore, our upcoming, interoperable, onchain credit scoring solution for DeFi on EigenLayer! EigenLayer’s AVS technology was a natural choice. If you’re new to EigenLayer, we explain it in simple and more technical terms below, along with some details about how zScore will work in practice.

What is EigenLayer?

EigenLayer in Simple Terms

Imagine you have a really strong lock on your bike. This lock keeps your bike safe when you're not using it. That's kind of like how Ethereum works - people "lock up" their digital money (called Ether or ETH) to keep the whole Ethereum network safe and running smoothly.

Now, EigenLayer is like a special add-on for your bike lock. With EigenLayer, your lock doesn't just protect your bike anymore. It can also help protect your friend's skateboard, your sister's scooter, and maybe even the playground equipment - all at the same time!

Here's how it works:

• You still use your lock to secure your bike (like putting Ether into Ethereum).

• But now, you can tell your lock to also watch over other things (like other networks or apps built on Ethereum).

• Because your lock is doing extra work, you might get some rewards, like extra allowance money.

The cool thing is, your lock is still on your bike, keeping it safe, but now it's also helping to keep other things safe too. This makes everything more secure without needing extra locks.

EigenLayer is trying to make the digital world of cryptocurrencies work together better, kind of like how you and your friends might team up to watch each other's stuff at the park.

Now that we’ve gotten a baseline understanding of EigenLayer and what it aims to do, let’s get more technical.

EigenLayer Changes the Restaking Paradigm

EigenLayer is a kind of blockchain that uses the security of Ethereum and abstracts everything else. We can build services on EigenLayer, like an oracle, and use Ethereum’s security indirectly to secure our oracle and make it decentralized. The major advantage of this approach is that Zeru would not need to build a blockchain from scratch and spend time bootstrapping a network of nodes. Instead, it can rely on the most secure network’s security out-of-the box, and focus on building services and applications instead.

On EigenLayer, these services are called actively validated services, or AVS for short.

An AVS can incentivize validator nodes to validate its services, ensuring enough validators are operating to offer high performance and security.

Stakers can stake liquid staking tokens (LST) and delegate power to these nodes to validate different AVS. In addition to that, with enough computing resources, one validator node can validate multiple AVS.

Stakers stake LST in EigenLayer contracts on Ethereum. Developers can either deploy AVS contracts on Ethereum, which is the onchain approach, or employ the off-chain approach depending on their needs.

Each validator node involved in an AVS must run the custom software offered by the AVS developer. For example, software that fetches token prices from centralized exchanges. The validator signs the data to validate it, and sends it back to the smart contracts or another avenue the developer specifies, potentially off-chain. EigenLayer has lots of other AVS examples in their documentation.

The Problem to Solve

The absence of decentralized credit scores in DeFi has led to the rise of centralized credit score providers, resulting in centralized control and potential manipulation or censorship of users' credit scores. This is a problem that many have tried to solve, but none have created a compelling, widespread solution that works across most, let alone all, of DeFi. Many approaches have incorporated only the largest DeFi protocols without any direct feedback mechanism back to those DeFi protocols, while others have attempted to include decentralized identity solutions at the same time leading to delays due to poor standards, lack of interoperability, and more.

At Zeru, we believe that we have finally cracked the nut!

Zeru’s Solution

The team here at Zeru has decided to adopt a novel approach, creating a decentralized, artificial intelligence-driven credit scoring model. We will develop an AVS that runs a light-weight AI model internally, scoring user addresses based on their onchain behavior from different lending protocols. We call this solution zScore.

To help solve the interoperability issue, Zeru’s own protocol and dApps will use zScore. Having zScore operate on EigenLayer as an AVS will make it easy for other protocols in DeFi to use the zScore decentralized AI credit score as a service!

How will zScore be decentralized? Each wallet’s credit score, or zScore, will be generated by operator nodes that opt-in to run this AVS, ensuring decentralization. All participating operator nodes run an AI model to generate accurate credit scores. If a malicious operator attempts to provide an incorrect score, they will be penalized, thus preventing manipulation and ensuring censorship resistance.

Why zScore Will Run on EigenLayer

The first decentralized credit-score-as-a-service protocol will be on EigenLayer in the form of an AVS. This zScore AVS will serve all of DeFi to facilitate identifying a wallet’s creditworthiness, allowing lending protocols to evolve to become credit enabled. When this happens, gone are the days of over-collateralized loans, a disservice to creditworthy blockchain users that have had to suffer under this standard regime for nearing a decade.

zScore will offer a universal, credit profiling credit score that updates in real-time, after receiving real-time transactions from other protocols. As more users opt-in to zScore, and more protocols integrate it into their platforms, this begins a flywheel of generating more liquidity and better prices for every party involved.

Zeru can also provide additional incentives for the operators that run the zScore AVS, and that’s something we look forward to identifying as we build out this new DeFi primitive.

If you would like to learn more about incorporating zScore, or help Zeru build it, please get in touch via Discord!