4. System Architecture

4.1 AI Strategy Engine (OracAI-Powered)

The AI Strategy Engine is the core intelligence layer of CredDeFAI Protocol, providing automated financial strategies and personalized risk management.

Key Features:

  • Data Aggregation Layer: Collects on-chain (DEX/DeFi protocol activity, lending pools, price oracles) and off-chain data (market sentiment, news, social signals).

  • Predictive Modeling: Uses machine learning models to forecast yield opportunities, arbitrage spreads, and liquidation risks.

  • Portfolio Optimization: Generates personalized allocation strategies, adjusting in real-time based on market volatility.

  • Automated Execution: Executes transactions through smart contracts with user-defined risk thresholds.

Technical Note: AI computation occurs off-chain for efficiency and privacy, while all resulting decisions and logs are verified and recorded on-chain for transparency.

4.2 NFT-Based Credit System (Credit NFTs)

The Credit NFT acts as a soulbound digital identity, recording all financial behavior and serving as a dynamic on-chain credit score.

Mechanism:

  1. Activity Tracking: Loan repayments, staking, swaps, and AI-strategy usage are logged on-chain.

  2. Credit Scoring Algorithm: A multi-dimensional algorithm calculates a score based on transaction history, timeliness, and AI strategy performance.

  3. Level Upgrades: As credit improves, NFTs dynamically upgrade, unlocking benefits such as:

  • Higher borrowing limits

  • Access to premium AI strategies

  • Gasless swap privileges

Technical Implementation:

  • NFTs comply with BEP-721/SBT standard (or ERC-721S equivalents for cross-chain).

  • Smart contracts enforce immutability and prevent NFT transfer, ensuring reputation is non-transferable.

4.3 Over-Collateralized Lending Framework

Users can borrow beyond their deposited collateral by combining Token asset deposits + NFT credit proof.

Features:

  • Collateral Management: Accepts multiple DeFi assets, with dynamic liquidation thresholds.

  • Credit-Enhanced Borrowing: NFT credit scores increase borrowing multipliers (e.g., 120% borrowing for high-credit users).

  • Risk Control: Defaults trigger NFT credit score downgrade and smart contract-based penalties.

Technical Note:

  • Lending smart contracts use multi-signature oracles to validate collateral values.

  • Supports both stablecoins and volatile assets via dynamic risk-adjusted collateral ratios.

4.4 Gasless Swap Mechanism

To reduce friction, Credit NFT holders enjoy gasless token swaps.

Implementation:

  • Uses meta-transactions: protocol or relayer pays gas on behalf of the user.

  • Smart contracts verify NFT ownership and credit level before executing swap.

  • Can integrate Layer 2 solutions (e.g., BSC Rollups or Arbitrum) to further reduce fees.

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