What is 3Jane aiming to achieve by connecting bank credit on-chain and offering 0% collateral loans?

In the current DeFi lending ecosystem, if ordinary users wish to borrow funds, they usually need to provide over-collateralized on-chain assets, limited to ETH, stablecoins, or certain mainstream crypto assets. This model not only restricts capital utilization but also excludes many potential users. Even unsecured loan services are often limited to specific groups such as off-chain private credit companies or institutional market makers. This situation significantly reduces the inclusiveness and capital efficiency of DeFi lending.

However, the emergence of 3Jane may break this constraint. Its core idea is to integrate on-chain and off-chain credit data, issuing loans based on users’ comprehensive credit rather than relying solely on partial on-chain assets. In other words, users can use DeFi assets, CEX assets, bank assets, and future cash flows as credit evaluation factors, allowing them to obtain loans without the need for collateral.

What is 3Jane?

3Jane released its whitepaper on February 25. According to the official introduction, the 3Jane protocol is a credit-based point-to-pool money market that provides algorithmic, real-time unsecured USDC credit lines for yield farming users, traders, enterprises, and AI agents. 3Jane provides capital based on verifiable financial proofs, which cover the user’s entire financial profile across DeFi assets, centralized exchanges, brokerage accounts, and bank accounts.

In addition, 3Jane can also provide working capital and growth financing for highly productive enterprises and AI agents with fewer assets, covering financial markets, service markets, and resource markets, with credit assessments based on their future cash flows.

In December last year, 3Jane stated that it would be built on the Base network. However, the latest whitepaper only emphasizes that it will launch on Ethereum. In its early stage, 3Jane will be available only to users in the United States.

3Jane’s founder, @_yakovsky, previously worked at Ribbon Finance (later merged into Aevo) for three years. He joined the protocol one month after its establishment as a smart contract engineer, later shifted to growth strategy work, and left Ribbon Finance in April 2024.

How does the 3Jane protocol work?

The 3Jane protocol mainly focuses on three core functions: core money market, credit assessment and credit reduction:

1. Core Money Market (Depositing and Borrowing)

It is a two-sided market that connects lenders and borrowers:

• Lender:

Users deposit USDC into the pool to mint USD3 and can also choose to stake USD3 as sUSD3. All USDC is first deposited into the Aave V3 USDC pool, and after generating aETHUSDC, it is redeposited into the 3Jane core money market to ensure that idle capital earns Aave’s base return.

It is important to note that both USD3 and sUSD3 are yield-bearing tokens compliant with the ERC-4626 standard. ERC-4626 is a standard for tokenized vaults, allowing any yield-bearing token to be compatible with any DeFi application, thereby enhancing composability and accessibility. sUSD3 is the subordinate debt of USD3, and a cooldown period is required before it can be withdrawn as USDC.

• Borrowers:

Borrowers only need to connect their ETH address and bank account (via Plaid) to instantly generate a USDC credit facility with 0% collateral, open terms, and a personalized interest rate. When the borrower draws from the credit line, the funds are withdrawn from the Aave pool.

2. Credit Underwriter

3Jane’s off-chain credit assessment algorithm, 3CA, is its core technology. It is responsible for generating credit limits, default risk interest rates, and repayment rates based on the user’s assets, cash flow, and credit status, and uploading the results on-chain together with zkTLS proofs (provided by the Reclaim protocol).

• Asset sources: This includes assets from CEX, banks, brokerage accounts, and DeFi assets (all assets deposited into pools on EVM chains, major tokens, altcoins, stablecoins, staking, restaking, money markets, DEX liquidity pools, CDPs, derivative DEXs, cross-chain bridges, NFTs, SoFi, and RWA assets).
• Cash flow: Income, vote-locked tokens, and revenue status.
• Credit status: Based on Cred scores, Blockchain Bureau scores, and Equifax/TransUnion VantageScore 3.0. These credit protocols assess creditworthiness based on each user’s transactions — including loan borrowing, repayments, liquidations, held tokens, address age, yield generation, and interactions with exchanges.

The Reclaim protocol uses zkTLS proofs to verify any data on the internet. 3Jane, through Reclaim, uses zkTLS to avoid traditional hard credit checks (such as using SSN) and instead directly extracts credit-related data from the user’s logged-in Credit Karma account.

3. Credit reduction

3Jane uses the following three strategies to minimize the occurrence of defaults:

1. Reducing the 3Jane score of defaulting users, which lowers their future credit limits and raises future interest rates.
2. Distributing the overdue interest repayments of defaulters proportionally to all current borrowers.
3. Launching non-performing loan (NPL) auctions and bringing in debt collection agencies.

As for whether the debt collection mechanism raises privacy concerns, to protect user privacy, 3Jane does not store user identity information unless a default occurs. When connecting a bank account, 3Jane obtains the full name, email, phone number, and city/state information, and stores this data in an encrypted, fragmented form across multiple cloud providers. Private user data is only shared if a default occurs and when a debt collection agency accepts a debt collection challenge. Additionally, partnering debt collection agencies must have access to the TLOxp database, which provides 100 billion data points to help locate debtors.

How to repay? What happens if there is a default?

3Jane states that each month, borrowers must make a minimum repayment. When designing repayment rules, the 3Jane protocol adopts a relatively flexible and borrower-friendly approach.

Specifically, the monthly minimum repayment amount is not a fixed principal plus interest but is calculated as the lower value between two methods. According to the wording of the 3Jane whitepaper: “The borrower only needs to repay the lesser of either the lifetime appreciation since drawing the credit line, plus interest and repayment rate.”

The author’s understanding is that the monthly repayment amount is the lower of the following two calculations:

1. The cumulative growth in the borrower’s asset portfolio (including on-chain and off-chain assets) and cash flow since the borrower first drew the credit line.
2. The principal repayment portion and interest determined by 3Jane based on the credit assessment.

The core of this design lies in avoiding excessive repayment pressure on borrowers, especially during periods of market volatility or poor asset performance. But what if the cumulative growth value is negative — how should repayment be handled? The author is currently unclear on the specific details. Perhaps 3Jane already takes into account the volatility of unstable assets when issuing loans.

Borrowers have a certain grace period to repay their debt after a new repayment trigger. After the grace period, the borrower enters a delinquency period, during which additional overdue interest begins to accrue on the outstanding principal. If the debt is still not repaid by the block timestamp marking the end of the delinquency period, the borrower enters default status. At this point, the 3Jane credit reduction module is automatically triggered, and a non-performing loan (NPL) auction is initiated.

Summary

3Jane breaks the over-collateralization constraints of the DeFi lending ecosystem by integrating on-chain and off-chain credit data, providing users with unsecured loan services based on comprehensive credit.

The author believes that 3Jane avoids direct competition with traditional finance and instead serves specific needs within the crypto ecosystem, targeting highly active users in the Web3 space. These users often hold diversified assets or cash flows, and 3Jane offers them greater liquidity on-chain.

The concept of unsecured loans from 3Jane is eye-catching, especially with its forward-looking approach to building a Web3 credit system. However, the realization of these advantages depends on the reliability of the data and algorithms, the accuracy of credit assessments, and the efficiency of bad debt management. For both users and investors, it is important to fully understand these risks before participating and to pay attention to the project’s audit reports, testnet performance, and future development progress.

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