Whitepaper

Traditional credit systems are exclusionary by design. They require existing credit history to build credit, creating a paradox that traps billions in a cycle of financial invisibility. The World Bank estimates that 1.4 billion adults are unbanked, and many more are underbanked with limited access to credit.

Existing credit scoring models (FICO, VantageScore) are opaque, centralized, and geographically restricted. They do not recognize informal savings behavior, community trust, or cross-border financial activity. Immigrants, gig workers, and rural communities are systematically excluded.

Meanwhile, ROSCAs — known by dozens of names worldwide (chamas, tandas, susus, cundinas, paluwagan) — have served as informal credit and savings vehicles for centuries. These systems rely on social trust but are vulnerable to fraud, mismanagement, and lack of verifiable records.

Halo Protocol bridges this gap by encoding the ROSCA mechanism into auditable smart contracts and replacing informal trust with cryptographic guarantees and on-chain reputation.

A ROSCA (Rotating Savings and Credit Association) is a group savings mechanism in which a fixed number of members contribute a set amount to a common pool each round. Each round, one member receives the entire pool. The rotation continues until every member has received a payout.

In Halo Protocol, the ROSCA mechanism is implemented as follows:

• Circle Creation: A creator initializes a circle with parameters: contribution amount (in SOL or USDC), round frequency, member count (3-10), and minimum trust score requirement.
• Member Joining: Members join by depositing a stake (collateral) proportional to their trust tier. Higher trust scores require less collateral.
• Contribution Rounds: Each round, all members send their contribution to the circle's escrow PDA. The smart contract enforces deadlines and tracks payments.
• Payout Distribution: The full pool is distributed to the designated recipient for that round. Payout order can be predetermined or determined by governance vote.
• Circle Completion: After all members have received a payout, the circle completes. Stakes are returned, and trust scores are updated.

Halo Protocol implements a transparent, on-chain trust scoring system. Each user's trust score ranges from 0 to 1000 and is calculated based on four weighted factors:

Scores map to four tiers with corresponding stake multipliers:

Halo Protocol is built on the Solana blockchain using the Anchor framework (v0.31.1). The smart contract system consists of over 30 instructions managing circles, members, escrow, payouts, trust scores, insurance, governance, and yield.

On-Chain Components

• Circle Account: Stores circle parameters, member list, round state, and payout schedule. PDA seeds: ["circle", creator, id_bytes].
• Escrow Account: Holds pooled funds for each circle. PDA seeds: ["escrow", circle].
• Member Account: Tracks individual member state within a circle. PDA seeds: ["member", circle, authority].
• Trust Score Account: Stores computed trust score and component weights. PDA seeds: ["trust_score", authority].
• Insurance Account: Manages the insurance pool for each circle. PDA seeds: ["insurance", circle].
• Treasury & Revenue: Protocol-level accounts for fee collection and distribution. PDA seeds: ["treasury"] and ["revenue_params"].

Off-Chain Infrastructure

• Frontend: Next.js 14 App Router with TypeScript, TailwindCSS, and Solana Wallet Adapter.
• Database: Supabase (PostgreSQL) for off-chain metadata, user profiles, and activity logs.
• Caching: Upstash Redis for rate limiting, session management, and real-time data.
• Indexing: Helius webhooks for real-time on-chain event processing and notifications.

Halo Protocol currently operates without a native governance token. Circles accept SOL and USDC (SPL tokens) for contributions and payouts. Governance is implemented through on-chain voting by circle members using their existing stake.

A future governance token may be introduced to decentralize protocol upgrades, fee parameter changes, and treasury management. Any token launch will be preceded by community discussion and governance proposals.

Fee Structure

• Distribution Fee: 0.5% on each payout distribution
• Yield Fee: 0.25% on generated yield
• Management Fee: 2% annual on active circle balances

All fees flow to the protocol treasury and are governed by the revenue_params account on-chain.