The boom of blockchain loans

The data from RWA, a tracker of asset-backed loans in the real world, testify to a lively recovery in the blockchain loans sector. 

Loan buyers are showing increasing confidence in blockchain-based alternatives compared to traditional lenders, especially in a context of rising interest rates. 

As a result of this trend, the volume of loans has recorded a significant increase, reaching the amount of 582 million dollars and doubling compared to 2022. Let’s see all the details below. 

An analysis of the blockchain lending boom 

Blockchain-based loans offer borrowers the opportunity to maintain ownership of their assets and access liquidity through the means of a loan, using digital assets as collateral. 

Among the most recognized blockchain credit protocols are Centrifuge, Goldfinch, Maple, Clearpool, and Credix.

In addition, the facilities and services for such loans are provided through the use of some of the leading cryptocurrencies, including USD Coin (USDC), tether (USDT), and Dai (DAI).

According to the data provided by RWA, loan applicants are increasingly preferring blockchain-based options over traditional lenders. 

During 2023, the total value of active tokenized private credit reached $582 million, recording a significant increase of 128% compared to the previous year, an increase fueled in part by the current rise in interest rates.

Focusing on current numbers, the average annual percentage rate (APR) organized by blockchain credit protocols stands at 9.65%, compared to bank interest rates for small businesses, which range from 5.0% to 11.5% according to data from NerdWallet collected on December 1, 2023.

A real-world asset loan tracker has examined the data and concluded that, based on the analysis, blockchain-based loans have reached a total of $4.5 billion through 1,804 transactions, with an average of approximately $2.5 million per loan.

The key sectors in charge of the $582 million contributions 

Examining the market of United Kingdom, it is evident that companies like the Brazilian bank Divibank and Fasanara Capital are contributing significantly to the growth of blockchain-based loans.

For example, Fasanara Capital, an asset management company, obtained a loan of 38.3 million dollars from Clearpool with an annual interest rate of 7%.

In addition, Centrifuge holds 43% of the current active loans market, with a value of 255 million dollars, while Goldfinch and Maple respectively hold 143 million and 103 million dollars of active loans.

The main supporters of blockchain-based loans are loan seekers, allowing the total to reach 582 million dollars. However, the consumer goods and automotive sectors have positioned themselves at the top as the main contributors.

The consumer sector has invested $197.7 million in loans, while the automotive sector has employed $186.8 million. 

Among the other relevant participants, the Carbon project has obtained funding of 39.5 million dollars, while Crypto Trading has accessed a loan of 30.5 million dollars. 

The fintech sector has contributed 105.2 million dollars, while the real estate sector has borrowed 40.0 million dollars through blockchain credit protocols.

Despite the gradual growth of the sector, currently the market for blockchain-based loans is lagging behind the traditional private credit market. 

The size of the blockchain-based lending market represents about 0.3% of the traditional credit market, with a value of 1.6 trillion dollars.