Thread by @ChainLinkGod

Up next at #SmartCon is a panel about #Chainlink DECO with @ethlorenz, @0xFanZhang and @ryanmberkun

Ryan: @useteller is an consumer credit protocol, developer focused, anyone can launch credit based money markets

Fan: Co-author of DECO paper, Duke University professor and researcher at Chainlink Labs, interested in privacy and security of blockchain and oracles

DECO solves the problem of sharing more data that is necessary to prove something, "does Alice have enough money in her bank without revealing her banking credentials, or does Bob have a good credit score without revealing his SSN"

DECO uses zero knowledge proofs to prove facts

DECO taps into existing infrastructure, backwards compatible, innovation happens faster

Privacy preserving opens up access to rest of real world information off-chain, finance, identity, healthcare

Chainlink opens that up, DECO provides the privacy

Origins of DeFi is the financial ecosystem that is transparent, truly own your money, collateralized loans, (just like finance started), good for those in the system, but to break out of needing money to access capital, need to use reputation, use that info in DeFi

Credit works to provide users capital before they have it, overcollateralization will be replaced by giving users capital even if that capital has collateral in the background (like a mortgage, borrower doesn't have full capital but home is used as collateral)

Two technical aspects of DECO, first is to prove data came from authentic source, sources don't have signatures today, another is privacy, share transaction history to take out a loan but only want to share what is necessary

DECO works for banking information, social information, GitHub information, just data points on users, useful when they can be scored, instead of taking number, take a log of it, tells a higher level information

Teller + DECO = credit worthiness for undercollateralized loans, generates a score for smart contracts, only data revealed is the score, not the underlying data that went to create that score

Also powers off-chain identity protocols

Off-chain identity data can include any data proves some property about someone, from DMV website to prove one's age, users can form and control their own identity using cryptographic techniques like DECO

Teller will use DID, even dark net sellers needed reputation, don't need to know their name, but you can trust their reputation, DIDs and Web3 standard are similar

DECO in DeFi: unlock value in private data, and giving users full control, normally need to reveal way more data than necessary, showing ID to prove age gives access to your home address, using DECO allows for more trustworthy private agreements

DECO is backwards compatible, existing systems don't need to change their backend, GDPR requirements means users can ask for their data, then it can be converted in DECO to address capital markets, incentivized for users to use their data

Legacy compatibility allows for fast innovation and a good user experience, backward combability is a huge feature

DeFi has only started, first wave of innovators, capital markets underpin the economy, $15T market in the US alone, DeFi brings massive markets on-chain

Reveal one bit of information, not give away your home address, users only share the minimal amount of data needed for a use case, but no more than that

Identity, healthcare, and climate is three main use cases