- Private tokenized loans gained 128% this year
- Blockchain lenders charge an average loan interest rate of 9.64%
- The average blockchain loan amount is $2.5M
Blockchain-based lending is becoming popular again in 2023. Private tokenized loans gained 128% this year, reaching the value of $582 million according to Cointelegraph, who cite data from RWA.xyz, a real-world asset loan tracker.
The increase could indicate that loan recipients are looking for decentralized alternatives to traditional loans against the backdrop of a recent interest rate hike.
Affordable rates on huge loans
According to data for early December cited by Cointelegraph, blockchain-based lending protocols charged an average loan interest rate of 9.64%, while traditional lenders like banks have been offering rates between 6% and 12% to small businesses.
The average blockchain loan amount is quite substantial. According to RWA.xyz, who have data on almost 2,000 loan agreements, the average loan was $2.5 million.
Prominent borrowers
Fasanara Capital is among the most prominent loan recipients of late. The United Kingdom-based asset management company took out a loan of $38.3 million from Clearpool at an annual base interest rate of under 7%.
Clearpool is a decentralized capital market network that offers unsecured loans directly from the DeFi ecosystem. The Clearpool protocol runs on both the Ethereum Mainnet and Polygon.
Top lenders
Centrifuge, which is based on the Ethereum Mainnet, holds more than 43% of the current active loan market. Its share amounts to $255 million and has increased by more than 200% since the beginning of this year.
The second-biggest blockchain-based lender is Goldfinch with active loans of $143 million, followed by Maple with $103 million.
Most loans are in stablecoins
Most blockchain-based loans are in US dollar-pegged stablecoins such as USD Coin (USDC), Tether (USDT), and Dai (DAI).
Top industries
The biggest blockchain-based borrowers represent the consumer industry with credit amounting to $198 million, closely followed by the automotive industry with $187 million. Other leading sectors include crypto trading, fintech, carbon credit, and real estate.
The risks
Potential loan recipients should consider risks stemming from smart contracts, bankruptcy, and collateralization. The decentralized loan market, currently worth $506 million, is still approx. 0.3% the size of the traditional loan market, worth $1.6 trillion.
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