On-chain private credit

Private credit is lending that happens outside public bond markets, from loans to small businesses to trade finance and fintech lenders. On-chain versions use smart contracts to gather stablecoin deposits into pools, which a pool manager or underwriter then lends to vetted borrowers under legal agreements. Interest flows back on-chain to token holders. Maple, Centrifuge, Goldfinch and Figure are among the platforms involved, and tokenized private credit is one of the largest categories of real-world assets on blockchains.

It appeals to crypto investors seeking yields not tied to crypto market cycles, and to borrowers who can access a global pool of capital. DeFi protocols increasingly accept these tokens as collateral or hold them in their treasuries.

The risks are those of credit, not code: borrowers can default, collateral may be hard to seize across borders and loan information is often limited. Several on-chain credit pools suffered defaults after 2022. Redemptions can take weeks or depend on new deposits, and much of the due diligence rests on off-chain parties.