Why is private credit the first real bridge between Tradfi and DeFi
Author of article:Bryan Dagherty
Articles compiled:Block unicorn
THERE'S A REASON FOR PRIVATE CREDIT TO ADJUST TO THE CHAIN EARLIER THAN MOST RWAS
It itself has the elements of a chain of market pricing: gains。
This makes its path clearer than private equity, venture capital or real estate。
Those categories mainly concern access, packaging or long-term investments。
Private credit provides a more direct avenue。
Cash flows can be distributed, financed and eventually reused in the encrypted market。
(Source: DefiLlama)
It's not that private credit has been monetized
It is private credit that begins to work on the chain。
Many monetized assets are still in the distribution phase。
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They're packed。
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They were distributed。
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They're stored in their wallets。
Private credit goes further。
It began to appear as collateral in the lending market and in a strategy to allow users to borrow against the asset without having to withdraw completely。
This is much more important than simple tokenization。
Markets are already distinguishing access from utility
A strong signal in the report is that the market value of most active private credit is concentrated in products that do not require a licence。
(source: rwa.xyz)
This points to important information。
Users want more than just private credit。
They want to act more like private credit for encrypted assets:
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Transferable
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It can be used in DeFi
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Easy to finance
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It is easier to move between sites
This is distinct from the essentially unchanged interest rate of the Fund。
The fastest growing product comes from products built for Crypto Railways
Another salient point is where capital actually is located。
(Source: DLResearch)
The largest share of private credit in the chain is not in the currencyization fund packaging。
It's from the chain lending pool。
This is essential because it shows that markets are rewarding structures designed for use in the chain, rather than simply repackaging traditional products to accommodate new channels。
The stronger the product is in the encryption market, the more demand seems to be attracted。
Why does private credit take the lead
Private credit solves two problems simultaneously。
For traditional asset managers, monetization has improved distribution。
For the chain market, it introduced a new form of productive collateral。
THIS COMBINATION IS STILL RARE IN RWA。
Real estate can be monetized, but liquidity and valuation remain elusive。
Private equity and venture capital investments can be monetized, but mostly remain passive。
Carbon credits benefit from better tracking, but are less useful in decentralised finance (DeFi)。
Private credit was one of the first types of monetization that simultaneously improved access and financial use。
None of this eliminates the risk
It remains private credit。
Underwriting remains important。
The quality of all borrowers remains important。
Recovery value remains important。
Mobility remains important。
Placing assets on the chain does not solve any of these problems。
It simply makes it easier to distribute products and, in some cases, finance them。
It's useful。
But this is not the same as reducing potential risks。
THE REAL REVELATION OF RWA
Private credit is important because it shows what market incentives are。
Not just monetized assets。
It's those assets that become more useful once the chain is up。
IT'S PROBABLY THE WAY TO THINK ABOUT THE NEXT PHASE OF RWA MORE CLEARLY。
Industry leaders will not be the easiest assets to seal。
They will be those assets that derive real practicality from becoming part of the chain financial system。
