Blockchain-based lending has regained momentum in 2023, with the value of active tokenized private credit now sitting at $582 million — a staggering 128% increase from a year ago.
While still far from its peak of $1.5 billion in June 2022, according to data from real-world asset loan tracker RWA.xyz, the resurgence could signal that loan-seekers are looking for blockchain-based alternatives to traditional financiers amid a recent rise in interest rates.
The current average percentage rate is 9.64% for blockchain-based credit protocols, while financiers have been offering small business bank loan interest rates between 5.75% and 11.91%, according to a Dec. 1 report by NerdWallet.
The loans being taken out aren’t small either. RWA.xyz has tracked $4.5 billion in blockchain-based loans across 1,804 deals, which means the average loan comes out at about $2.5 million.
One of the most noteworthy loan-seekers of late is United Kingdom-based asset management firm Fasanara Capital, which took out a $38.3 million loan from Clearpool at a sub-7% base annual percentage yield (APY).
Brazilian bank Divibank is another financial institution participating in the market.
Ethereum-based Centrifuge owns over 43% of the current active loans market with $255 million, up 203% from $84 million at the start of 2023.
Goldfinch and Maple are the second and third largest blockchain credit protocols, with $143 million and $103 million in active loans, respectively.
United States dollar-pegged stablecoins Tether (USDT), USD Coin (USDC) and Dai (DAI) are three of the main cryptocurrencies used to facilitate these loans.
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The largest blockchain-based loan-seekers come from the consumer ($197.7 million) and automotive ($186.8 million) sectors, followed by fintech, real estate, carbon credit and cryptocurrency trading, the data shows.
Despite the recent rise, the $506 million active loan market is about 0.3% the size of the $1.6 trillion traditional private credit market.
Obtaining loans from blockchain-based protocols does, however, come with risks. Loan-seekers should weigh insolvency, collateralization, smart contracts and other security risks before borrowing.
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