Analysts recorded an increase in the tokenized private loan market to $582 million this year, up 128% from 2022. This is due to the fact that the average annual percentage rate (APR) for blockchain loans is significantly lower than for cash loans.
According to data from tracker RWA.xyz, as of December 18, the total asset value of tokenized private loans stands at $581.5 million, more than double last year’s figures.
The main growth driver for the blockchain loan market is the rising interest rates by traditional financial institutions. For example, the APR of blockchain loan protocols is 9.64%, while financiers offer bank loans for small businesses at an average APR of 11.91%, NerdWallet reports.
Data analytics shows that blockchain loans amount to $4.5 billion over 1,804 transactions. The Ethereum-based protocol Centrifuge accounts for more than 43% of loans, with transactions via Centrifuge growing from $84 million to $255 million over the year. The other largest blockchain lending protocols are Goldfinch and Maple with $143 million and $103 million in active loans, respectively.
The main cryptocurrencies used for blockchain loans are stablecoins:
- Tether (USDT);
- USD Coin (USDC);
- Dai (DAI).
The most active regions in the blockchain loan market are:
- Kenya in terms of total amount borrowed ($73.8 million);
- Mexico in terms of frequency of blockchain loans (over 67,000);
- USA in terms of average loan size ($20 million).
It’s worth noting that despite the active growth of the blockchain loan sector, the market is still far from its peak, which was recorded at $1.5 billion in June 2022. Moreover, the current size of the blockchain loan market is only about 0.3% of the size of the traditional private loan market.
The group of DeFi developers recently unveiled a decentralized liquidity marketplace that enables collateral-free lending. And TransUnion, one of the biggest U.S. credit bureaus, started providing credit scoring to users of DeFi protocols and Web3 projects.
