Blockchain private lending market rebounds.

Janak9955

Statistics show that an increasing number of companies are turning to blockchain-based private lending to seek financing in a world of rising interest rates, sparking a partial recovery for the industry that experienced a sharp decline during last year's cryptocurrency crisis.

According to data from the platform RWA.xyz, which tracks debt, active private loans through digital ledgers have grown by 55% since the beginning of 2023, reaching approximately $408 million as of November 28. However, this is still below the peak of nearly $1.5 billion in June last year and only a small portion of the thriving $16 trillion traditional private lending market.

While borrowing costs vary due to transactions, according to RWA.xyz and data from private lending institutions, fees for some blockchain protocols are less than 10%. In contrast, traditional credit providers are seeking double-digit rates in the current environment.

Advocates of digital ledgers argue that they bring transparency to transactions and repayments, as the blockchain is open to public scrutiny, and software known as smart contracts can monitor pressure and automatically recover loans or collateral.

Agost-Makszin, Co-founder of alternative investment management group Lendary (Asia) Capital, stated, "The increased transparency on the blockchain and the reduction of clearing mechanisms for loans have lowered the risk of lending. This could result in lending rates lower than traditional private credit, which typically has a slower lending process and longer clearing procedures."

Niti998

Is this a market where we can borrow, and can we profit from lending?

Shri

This market looks quite promising.

Ritu13

Not sure if there will be an opportunity for recovery.