Blockchain-Based Private Loans Soar to $582M, Doubling from 2022

Data indicates that blockchain credit protocols offer an average APR of 9.65%, compared to an average personal loan interest rate of 11.5%.

Blockchain-based lending has experienced a significant resurgence in 2023, with the total value of active tokenized private credit reaching a remarkable $582 million. This figure reflects a staggering 128% increase from the previous year.

Although this amount is still below the peak of $1.5 billion witnessed in June 2022, the resurgence suggests that borrowers are increasingly turning to blockchain-based alternatives in response to rising interest rates, according to data from real-world asset loan tracker RWA.xyz.

Currently, the average percentage rate (APR) for blockchain-based credit protocols stands at 9.64%. In contrast, traditional financiers have been offering interest rates for small business bank loans ranging between 5.75% and 11.91%, as reported by NerdWallet on December 1.

The loans secured through blockchain credit protocols are substantial in size. RWA.xyz has recorded $4.5 billion in blockchain-based loans across 1,804 transactions, resulting in an average loan size of approximately $2.5 million.

One notable borrower in recent times is the United Kingdom-based asset management firm Fasanara Capital, which obtained a $38.3 million loan from Clearpool at a sub-7% base annual percentage yield (APY).

Another participant in this market is the Brazilian bank Divibank.

Ethereum-based Centrifuge holds a dominant position in the current active loans market, accounting for over 43% with a total of $255 million. This represents a remarkable 203% increase from its starting value of $84 million in early 2023.

Following Centrifuge, Goldfinch and Maple rank as the second and third largest blockchain credit protocols, with $143 million and $103 million in active loans, respectively.

The primary cryptocurrencies used to facilitate these loans are United States dollar-pegged stablecoins, including Tether (USDT), USD Coin (USDC), and Dai (DAI).

The largest blockchain-based loan-seekers primarily come from the consumer sector ($197.7 million) and the automotive industry ($186.8 million). Other sectors include fintech, real estate, carbon credit, and cryptocurrency trading.

Despite the recent growth, the $506 million active loan market remains relatively small, accounting for only about 0.3% of the $1.6 trillion traditional private credit market.

It is important to note that obtaining loans from blockchain-based protocols carries inherent risks, including considerations related to insolvency, collateralization, smart contracts, and other security factors that borrowers should thoroughly evaluate before borrowing.

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