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What is wrong with the current onchain real world asset (RWA) private credit market?

Updated: Apr 22

6 years ago someone told me about a curious idea: putting invoice factoring on blockchain. At that time, I understood neither what a blockchain was nor what invoice factoring was. Luckily for me, at the time, both the blockchain technology and the legal framework were not established enough for the idea to be implemented. Yet little did I know this idea would be my crypto red pill moment and my light bulb conviction moment years later.

Loan Stats

Fast forward to Dec 2022, Maple, a DeFi credit underwriting platform I interviewed in 2020, crossed $1.8bil mark in loan origination volume while suffering a $35mil default from Orthogonal Trading. Similarly TrueFi, one of the earliest project in the space, has generated $1.7bil in loans while also suffering $10mil defaults from Invictus, Alameda and Blockwater Technology following recent market turmoil. Yet notwithstanding the flaws and inadequacies exposed during recent market stress periods, what started as an idea has gained significant traction as the market went from 0 to $4bil in loan origination in less than 2 years as data below demonstrate.

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