Blockchain-Powered Private Loans See Over 55% Growth in 2023

Blockchain-Powered Private Loans See Over 55% Growth in 2023

Surge in Blockchain-Based Private Credit

In 2023, the blockchain-based private credit sector has seen a significant increase, with private loans powered by blockchain technology jumping by over 55% to approximately $581.6 million. This growth is particularly notable given the high-interest-rate environment that companies are currently navigating.

Context of Blockchain Lending Growth

Although below the peak of nearly $1.5 billion seen in June 2022, this surge in blockchain-powered private loans has pushed the total loans value past the $4.5 billion mark, as per data from This marks a considerable shift in the private credit landscape.

Comparison with Traditional Private Credit Market

Despite the growth in blockchain-based credit, the traditional private credit market remains substantially larger, valued at $1.6 trillion, according to Bloomberg. However, the emerging blockchain sector is gradually gaining traction.

Diverse Blockchain Protocols for Private Credit

Among the nine Real World Asset (RWA) protocols, only a few extend beyond Ethereum, with one operating on Solana and another on Ethereum’s sidechain, Polygon. Centrifuge leads in active loan value, with over $255 million in active loans and a total loan value exceeding $492 million.

Benefits of Blockchain Lending

Blockchain lending is increasingly recognized for its transparency and the use of smart contracts, which contribute to reduced risks and lower borrowing rates compared to traditional private credit. Blockchain protocols generally charge borrowers less than 10% APR, contrasting sharply with the 15% to 20% rates common in traditional finance.

Crypto Giants Venturing into Blockchain Credit

Major players in the crypto industry, such as Coinbase Asset Management, are entering the blockchain-based private credit space. Project Diamond, reported earlier by, is a new development leveraging Ethereum’s layer-2 scaling network, Base. It integrates various Coinbase components and Circle’s USDC stablecoin.

Accessibility and Competition in Blockchain Finance

Currently, Project Diamond is available to registered institutional users outside the U.S. The launch coincides with growing competition to integrate traditional financial assets like bonds and credit into blockchain systems. The tokenization of real-world assets is expected to enhance settlement speeds, reduce operational costs, and increase transparency, further bolstering the appeal of blockchain-powered private loans.

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