Blockchain-Based Private Loans Witness 128% Increase, Hits $582M

By: Isha Das

Blockchain-based private loans have seen a significant resurgence, with a 128% year-over-year increase in value to reach $582 million, signaling a notable rise in interest in blockchain as an alternative to traditional financing amid rising interest rates. The average percentage rate offered by blockchain credit protocols currently stands at 9.64%, comparatively lower than the average small business bank loan interest rates ranging between 5.75% and 11.91%, according to a Dec. 1 report by NerdWallet.

Although this figure is still a ways off from the peak of $1.5 billion seen in June 2022, the significant recovery indicates a shift in the landscape of blockchain-based financing in a world grappling with increasing interest rates. Alongside private credit, tokenized treasuries – another subset of blockchain-based real world assets – hit an all-time high of $790 million in November, representing a significant growth of 572% since the start of the year.

The resurgence of blockchain-based lending might be attributed to increased transparency and faster liquidation processes compared to traditional methods, potentially decreasing the inherent demand risk.