This year, blockchain-based lending is gaining speed, and the value of active tokenized private credit is currently resting at $582 million.
This represents a phenomenal 128% growth from the previous year’s value. According to statistics from real-world asset loan tracker RWA.xyz, the revival may indicate that loan-seekers are seeking blockchain-based alternatives to traditional financiers in light of the recent increase in interest rates.
This is despite the fact that the market is still a long way from reaching its peak of $1.5 billion in June 2022. NerdWallet published a survey on December 1st, revealing that blockchain-based credit protocols currently have an average percentage rate of 9.64%, while financiers offer interest rates ranging from 5.75% to 11.91% for small business bank loans.
The loans that are being taken out are also not of a small amount. Over the course of 1,804 transactions, RWA.xyz has monitored a total of $4.5 billion in blockchain-based loans. This indicates that the average loan amounts to approximately $2.5 million.
Fasanara Capital, an asset management company based in the United Kingdom, is one of the most notable loan-seekers of late. The company obtained a loan from Clearpool for the amount of $38.3 million at a base annual percentage yield that was lower than 7%.
The Brazilian bank Divibank is also engaged in the market. With $255 million, Centrifuge, which is based on Ethereum, now owns more than 43 percent of the active loan market. This is a 203% increase from the $84 million it had at the beginning of 2023.
Active loans market from blockchain-based protocols since October 2020. Source: RWA.xyz
With active loans totaling $143 million and $103 million, respectively, Goldfinch and Maple are the second and third largest blockchain credit protocols, ranking in second and third place, respectively. Three primary cryptocurrencies are used to effectuate these loans.
Active loans market by sector from blockchain-based protocols. Source: RWA.xyz
These cryptocurrencies are the United States dollar-pegged stablecoins Tether (USDT), USD Coin (USDC), and Dai (DAI). The data reveals that the consumer sector ($197.7 million) and the automobile sector ($186.8 million) are the most prominent applicants for loans based on blockchain technology.
Following hh closely behind are the financial technology, real estate, carbon credit, and cryptocurrency trading sectors. In spite of the recent increase, the active loan market, which is currently worth $506 million, is just approximately 0.3% of the size of the traditional private credit market, which is worth $1.6 trillion.
The acquisition of loans through blockchain-based protocols does, however, involve some degree of risk. Individuals interested in obtaining a loan should consider the risks of insolvency, collateralization, smart contracts, and other security risks.