Forward the Original Title ‘RWA & Tokenized Credit Pt 2: An Investor’s Thoughts on the Digital Credit Landscape’

Introduction

In my last article, I provided an overview of RWA with a focus on tokenized credit and explained the market opportunities in cross-border lending and trade finance. Now, I’ll give a deep look into rising stars in the RWA sphere and how I’m thinking about this market as an investor.

Just note that, as someone who needs to maintain relationships in this space, I’m likely to leave out some of my more… controversial takes.

My Criteria for RWA Projects

As a VC, I spend a lot of time evaluating projects for both investment and landscaping purposes. The strongest projects in this space will provide avenues for low-risk investors to access Web3 private credit yields in safe, compliant ways.

With that in mind, the most important criteria I use to evaluate projects in this area are as follows:

1. Does the team have extensive underwriting experience?

This is probably the most critical piece for my evaluation of private credit projects, and a successful RWA project really needs a team that understands the process. If you haven’t spent much time researching private credit, you’re probably not really sure what “underwriting” entails.

Underwriting is the process of evaluating, assessing, and pricing the risk associated with issuing a loan — i.e., determining the likelihood of a borrower defaulting on their debt, and setting the interest rate accordingly. To evaluate this, underwriters will look at the company’s cash flows, credit history, balance sheet, and other indicators of financial health.

Underwriting also involves holistically managing risk across all outstanding loans. You can think about the underwriting process as a method of categorizing portfolios based on their creditworthiness and likelihood of default, creating specific “boxes” defined by certain criteria including expected default rate and pricing (for example, interest rates). Other constraints and considerations may also be in play, such as insurance or leverage.

If a portfolio falls within a predetermined “box” and meets the set criteria, then the lender will purchase the loan at the price set for that box. If the portfolio lies outside the box, the lender may buy the debt at a different price, or not at all.

The process of underwriting is extensive, requiring significant experience to do properly. It is also very expensive.

In my opinion, there is simply no substitute for traditional finance experience here, and it’s not a process that can be done with any kind of anonymity. Also, when lending to SMEs, this process usually requires expertise in the markets where the loans are issued, so focusing on a particular region is safer than attempting to service many regions at once.

Because the underwriting process is so extensive and so specialized, I prefer teams that have, at a minimum, roughly a decade of collective underwriting experience in TradFi. Or, as in the case of OpenTrade, a partnered underwriter to perform the process on their behalf.

This isn’t necessarily the strongest indicator of whether a product will massively succeed, but it is the strongest indicator of whether a project will massively fail.

2. Does the team have a thoughtful and robust Go-to-Market (GTM)?

Too many founders seem to be under the impression that a strong product is the only thing you need to attract customers and spend far too little time considering their GTM strategy.

First, on the customer’s end, RWA projects will be largely commodified. For the average customer, there isn’t a strong product differentiation between one yield-bearing token and another. A 5% yield on tokenized T-Bills is pretty much the same any way you swing it, plus or minus a few fractions of a percent. Maybe I’m oversimplifying a touch, but strong differentiation in this market absolutely requires a kick-ass GTM.

How are you thinking about bringing off-chain capital on-chain? How are you planning to do that? Are you focusing on retail or institutional investors, and why? What level of assets under management (AUM) is needed for profitability (for example, with invoice factoring this number would be ~$10M)? How are you going to get that capital on day 1 and retain it? How will you build brand recognition? Also, which markets/regions are they focused on, and why?

Depending on the type of underlying credit (as in, assuming we’re not talking about a tokenized money market fund), I might also ask how well they know the market/region they’re operating within, and how well connected they are to local borrowers.

This is the biggest reason I’m bullish on OpenTrade and CredBull — they have fantastic GTM strategies. Like I said earlier, though — more on that later…

3. Is there a strong reason to tokenize the underlying asset?

I’ve seen way too many projects in crypto that seek to do things in a Web3-native way for the sake of Web3 nativity, as opposed to building something the market actually needs (and I’m not just talking about RWA). Take this with a grain of salt because I’m constantly sitting on the middle curve:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/OLWOZBFM7BHMNER4A6UTYAQG3Y.png) and am very often wrong, but this is the reason I’m not super bullish on commodities and forex in crypto — the traders savvy enough to engage in those markets already have robust TradFi infrastructure.

A needed use case would be, for example, bringing a blockchain-native asset class to Web2 users, or providing T-Bill exposure to non-US citizens. Who would use this product, and why? And in what volume? And under what market conditions would the popularity of this product ebb and flow (consider, for example, interest rate regimes, opportunity costs in a bull market, etc.)?

Alternatively, how does this project use crypto as a fintech to augment and evolve the TradFi system? Blockchain has many awesome use cases like increased accessibility and liquidity, instant settlement (and thus increased capital efficiency, as less capital will be “trapped” in the latency of settlement), programmable money, and improved efficiency. Leveraging these strengths to improve the existing system, rather than attempting to replace it (as has been the narrative in crypto forever), gives me faith that a founder is thinking practically rather than idealistically.

4. How are they thinking about compliance?

Every project has different compliance needs, so this isn’t something for which I have a standard framework. I consider a lot of questions here. What are this project’s compliance needs? Where are they domiciled, and what licenses will they require accordingly? How will crypto regulation evolve in their home region, and how will they be able to adapt? Are they open to US citizens? If not, is there sufficient liquidity in their market to pull that 10x multiple on my investment?

What’s Happening Now in Tokenized Debt, and What To Watch

If you’ve been in crypto for a while, I know what you’re thinking: hasn’t the “tokenized private credit” narrative played out before? Heck, trade finance in particular was one of the earliest theorized enterprise use cases for blockchain. What happened with all the other private lending platforms, and what’s different now?

I think there are a few major differences. The first is that, in the early days of crypto when projects like Goldfinch were developed, the space was untested and more attractive to technologists than traditional finance gurus, so there was a lack of experienced financial talent. Like many early crypto projects, early SME lending protocols were very cool in theory, but, as I outlined earlier, credit underwriting is an extremely complex process that takes many years of experience to properly perform and intimately understand.

Furthermore, experts in credit know that it is difficult to properly underwrite a global portfolio (which is how most of these SME lending projects have operated thus far) rather than focusing on a particular region, where a team can develop expertise in a particular market.

As a result of weak underwriting practices, many of these projects were subject to the dangers of adverse selection — meaning riskier borrowers are more likely to apply for trade finance loans, which led to higher-than-acceptable default rates.

But the opportunity in crypto has become abundantly clear, and in recent years the crypto-sphere has seen a steady in-flow of TradFi veterans, many of whom have ample experience with credit.

Another factor is legal reform. ~80% of global trade is governed by English law, which historically mandated that only paper documents be legally-binding. However, the Electronic Trade Documents Act will soon provide legal recognition to electronic trade documents.

With that in mind, I’d like to highlight a few rising stars in the tokenized credit space, walking through the criteria I previously outlined for investment consideration:

Ecosystems

Plume

Plume is a modular L2 blockchain on Arbitrum Orbit dedicated for all RWAs that integrates asset tokenization and compliance providers directly into the chain. Plume simplifies the convoluted processes of RWA project deployment (including compliance) and offers a blockchain ecosystem to cross-pollinate and invest in various RWAs.

Plume aggregates other service providers so builders can choose whichever part of the modular stack they want, but those providers are seamlessly integrated together (i.e. they talk to each other).

The team differentiates with superior business development and ease of building on their platform, especially from legal and administrative standpoints.

Plume has 50+ integrations in their modular stack to handle the tough stuff in tokenizing real world assets. They cover the legal and admin stuff, like setting up legal entities, custodians, SPVs, on/offramps, cap table transfers, edge management, document administration, KYC/AML, and all kinds of things you’ve probably never considered.

Now, this isn’t a tokenized private credit protocol, but I do think it will be vital in the future of on-chain private credit.

Compliance:

Understanding Plume’s approach to compliance is vital to understanding the product, and why I think it’s leagues ahead of walled garden ecosystems (if you read my last article, you understand why these are problematic). A common problem with compliant/permissioned ecosystems is that people who wish to remain anonymous obviously can’t use them, and Plume has a great answer to that.

Aside from all the above legal/admin stuff, Plume has a modular compliance stack for projects that want to build permissioned products. For products in the Plume ecosystem that require KYC (or KYB/KYT/AML), KYC is performed at the dApp layer so you’re only KYC’d for that one product. But, KYC for one product also works for another product within the Plume ecosystem, so users only have to KYC once without sacrificing anonymity for dApps that don’t require it.

In short, both KYC and non-KYC products can exist within the Plume ecosystem at the same time and can be composable with each other. It’s the best of both worlds.

Additionally, Plume has access to a broker-dealer license through a partner so if it’s needed, it can be leveraged by projects in their ecosystem.

Why is Plume needed?

Right now it takes multiple years to get a project tokenized, and most of the people building these things now are finance people who want to leverage blockchain. Tech people build mediocre financial products, and finance people struggle with building crypto/tech products quickly.

But even more interesting: Plume builds a RWA DeFi ecosystem around this stuff. This is key to why I, personally, am exceptionally bullish on Plume.

Right now, you can’t do much with RWA. 10–12% yields on private credit or tokenized solar are alright, but not attractive in a bull market. But imagine if you could lever those (mostly) safe yields to hell. The beauty here is using all of the crypto-native tools like levered looping and “restaking” (or, easy rehypothecation) and all the other crypto-native functions we’ve used since the last bull market, but with yields and value sourced from RWA rather than emissions or ETH staking.

Suddenly your tokenized wine bottle or trade finance yield just got a whole lot more interesting.

I could write a whole article on why I’m in love with the idea of true DeFi for RWA, and why I think Plume is the perfect environment for it, but for the sake of staying focused, I digress.

Team

The Plume team comes from a mix of Web2 and Web3, with alumni from the likes of Robinhood, Coinbase, J.P. Morgan, Galaxy Digital, dYdX, Binance, and Google. Their CEO, Chris Yin, has had multiple successful exits as a founder and is a prolific investor, and his Co-Founder, Teddy Pornprinya, is the former BD Lead for BNB Chain.

The team is very well-equipped to head up an RWA ecosystem, and I’m very excited to see where this goes.

Go-to-Market (GTM)

Plume has dedicated a lot of time working with external communities to build out their ecosystem and draw in high-quality builders. Currently, 150 projects are building on Plume. They’ve got collectibles, private credit, DeFi, real estate, yield-bearing assets, agriculture, commodities, energy, etcetera.

Business development efforts are focused on particular areas they’re more bullish on — specifically products that feel more like crypto-native products (think DAI). I’ve spent a fair amount of time talking with Jason Meng, Plume’s Head of Business Development, and our theses on the future of RWA seem to be in pretty close alignment, meaning I believe their BD efforts are pointed in a very pragmatic direction.

For integrations, the Plume team focuses on things that are very liquid, high yield, low risk, and simple to understand. Private credit, yes (including a 3-way partnership with Credbull and Centrifuge), but also things like Econergy.

What is Econergy? Econergy is a $500m fund that owns solar farms all over the US. The farms are already built and they each have 30-year contracts with local schools, hospitals, government, and other very stable sources of income. Econergy tokenizes this yield and prints 12% APY in stables every year, which pays out monthly to holders.

In terms of larger strategy, Plume is playing both the short and the long game. In the short-term, the most consistent source of liquidity in DeFi will continue to be retail and pro-tail, which is why Plume is focused on building an ecosystem that caters to Degens — while remaining institution-friendly as a result of their modularity.

The team has regular chats with large institutions in both Web2 and Web3, aiming to capture continuing institutional capital inflows into the space over time. However, institutions move at a glacial pace, which is why I think focusing on both the long and the short game is brilliant — especially since many competitors I’ve seen tend to put too many eggs in only one of those baskets.

To ensure success on Day 1, Plume has >100m in pre-committed TVL from investors and partners, as well as wallet partnerships with Bitget, Binance, Liberty, OKX, and Coinbase (note: wallets, not exchanges). Testnet has >3.2m active wallets, and their Twitter (480k followers) and Discord (350k members) communities are thriving.

I fully expect a very successful Mainnet launch for Plume.

Provenance / Figure Markets

Although relatively unknown in the DeFi community until recently, Provenance, a layer 1 blockchain in the Cosmos ecosystem focused primarily on supporting institutional RWA, has come to dominate blockchain-based private credit. Needing marketplaces for Provenance-based RWA, Provenance built and spun out Figure Technologies (Figure Markets and Figure Lending), which is backed by Jump, Pantera, CMT Digital, and Lightspeed Faction.

I plan on exploring Figure Markets and Provenance a bit more in a future article (particularly focused on the institutional side of RWA) because the opportunity for venture investment here has come and gone, but it’s an important part of the current digital credit landscape.

I can’t overstate Figure’s of dominance in the arena of private credit. Their outstanding loan volume dwarfs the remainder of the market. Thus far, Figure has focused primarily on HELOC (Home Equity Line of Credit) loans, but are greatly expanding their scope.

Team

Provenance is a large, institutional company with a prestigious team to match. The CEO of Provenance Blockchain Foundation, Anthony Moro, spent more than 2 decades as an executive at BNY Mellon. Their COO, Dan Garzia, spent years at large financial institutions and Fortune 500 companies such as Franklin Templeton, BlackRock, and Electronic Arts, and spent time as the CMO of Securitize (if you’re not familiar with Securitize, it’s one of the most important pieces of the RWA landscape).

The key person of interest for both Provenance and Figure is Co-Founder Mike Cagney, who previously co-founded SoFi, a publicly-traded FinTech and online banking company (you might recognize the name from SoFi Stadium in Inglewood, California). Mike has a long history of successful ventures in institutional finance, and you can be sure he has the relationships to guide Provenance / Figure into the zenith of the institutional digital asset space.

Other Information

I don’t want to spend too much time diving into Provenance / Figure because, as mentioned earlier, discussions around this area would fit better into a follow-up article on institutional digital finance. But it is important that, despite not being super well-known in the Web3 arena, it is already one of the most successful blockchains currently in existence. And it continues to grow rapidly.

Find more info on recent updates here.

Private Credit Projects

With this section, I’ll focus primarily on up-and-comers rather than “legacy” private protocols like Goldfinch, Maple, Ondo, etc.

Credbull

Credbull is a DeFi credit platform in SME RWA, providing individual investors access to an advanced and inclusive financial ecosystem, including 10% fixed yield on TVL + 20% participation on the spread (regardless of market cycles), full ownership, governance and transparency over the deployment of the underlying assets, and an ongoing engagement and rewards program.

Team

The founding team has over 50 years of combined experience in asset management, loan origination, debt structuring and risk management in TradFi, as well as Web3 expertise with one of the largest NFT gaming platforms (Cross the Ages), Asia’s largest crypto OTC Brokerage, and Europe’s largest decentralized capital markets exchange.

With decades of credit and international banking experience from the likes of JP Morgan and Scotiabank, it’s safe to say these guys know what they’re doing.

Go-to-Market (GTM):

To supplement their B2C gamified investment strategy (inCredbull Earn, an investment engage-&-earn platform with a gamified UI/UX), Credbull takes a B2B2C approach, building partnerships with ecosystems, CEXs, custodians, and neo-banks who seek to offer high yields to their customers. This accessibility not only expands its market reach but also amplifies the prospects for financial gain through enhanced capital inflows and greater product utilization.

Their current strategic partnerships include Plume, Centrifuge, Arbitrum, and Copper.

One of CredBull’s strengths is their very specific regional focus, specifically lending to importers and exporters between India and the Gulf Cooperation Council (GCC), which includes UAE, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain, using the UAE as a “hub” in a hub and spoke model and initially focusing on the India to UAE trade corridor.

In my opinion, MENA and SSEA regions represent attractive growth focuses given the regions’ rapid growth rate and lack of adequate cash flow funding to SMEs in cross-border financing. In India, 65% of bankable SMEs are underserved. That number increases to 80% in the UAE, with $50B+ of India imports — many of which are often re-exported to international markets.

Compliance:

CredBull and Opal operate through entities across UAE, Cayman, EU/Malta, and Estonia under clear regulatory frameworks. Token-issuing and DeFi operating entities are regulated under Markets in Crypto-Assets Regulation (MiCA) in the EU, while the operating company for Opal is regulated under Dubai’s comprehensive VARA framework.

OpenTrade

OpenTrade provides both institutions and retail traders access to various on-chain credit products, including tokenized T-bills, commercial paper, and trade finance. Investors can lend USDC against investment-grade collateral and earn stable, predictable returns.

Team

The OpenTrade team are the former founders of the Marco Polo Network, one of the first and largest institutional trade finance and supply chain blockchain projects, used by major banks such as BNY Mellon and SMBC. Its backers included ING Ventures and BNP Paribas, and the infrastructure remains in use as Bank of America’s next-gen supply chain finance program (post-acquisition).

Even though the Marco Polo Network became insolvent, the team’s experience here is actually a huge factor in my favorable view on the project. Not only do they have extensive experience in blockchain trade finance, but OpenTrade’s approach has been directly informed by the challenges that presented barriers at Marco Polo. For example, while Marco Polo attempted to address the entire trade lifecycle, OpenTrade only addresses the financing leg of the transaction. Marco Polo focused on major institutions as clients, which includes a dangerously long sales cycle, while OpenTrade has B2B partners selling on their behalf.

The OpenTrade team has worked directly with over 30 of the world’s largest financial institutions and dozens of their corporate customers on all aspects of supply chain finance, and in my due diligence on the project I heard nothing but glowing reviews from their partners at Circle, Woo, and Enigma Securities.

Now I know what you’re thinking — what about underwriting-specific experience? OpenTrade’s credit underwriting is performed by experts at FiveSigma. Before forming FiveSigma, this team has cumulatively worked on $200–300B of assets in private and public credit, underwriting very complex deals across areas such as SMEs, trade finance, and mortgages. I feel very comfortable with the underwriting in their hands.

Go-to-Market (GTM):

Like CredBull, OpenTrade is primarily focusing on the B2B and B2B2C approach.

OpenTrade’s collaborations with CeFi platforms like Littio and Woo to enable digital dollar/euro accounts extend its market presence and bolster its ability to produce returns. These collaborations will likely lead to a larger addressable market, increased transaction volumes, and increased revenue potential.

Additionally, OpenTrade is backed by and partners with Circle, which is a massive boon to their business development efforts.

Compliance:

OpenTrade works with highly-regulated partners and customers and maintains a very high standard of compliance.

OpenTrade engages with various counterparties in their funds flow process and operates multiple distinct entities located in the UK and Cayman Islands. FiveSigma, which performs numerous services on OpenTrade’s behalf, is also fully regulated by the UK government.

OpenTrade implements a compliant financial crimes framework involving requirements for KYC, AML, and sanctions screening during onboarding and on an ongoing basis on all liquidity providers (which is facilitated by their B2B2C framework), and have engaged Reed Smith (a highly-reputable institutional law firm) as their legal council.

Huma Finance

Huma Finance is an income-backed lending protocol for businesses and individuals, seeking to augment on-chain RWA by enabling more complex instruments, and to improve credit underwriting in DeFi by incorporating reputation, revenue, and income (both on- and off-chain).

Huma differs from the other companies on this list in that they focus on infrastructure for RWA first and foremost, enabling complex debt instruments and structured finance.

Given that this article is focused on private credit, I won’t go too deep on their expansion into PayFi, but you can read about it here, and I’ll touch on it in my next article on institutional digital finance.

Team

A team of serial entrepreneurs with backgrounds in major roles at Meta, Google, and Lyft, the Huma founders met at EarnIn, a leading cash advance fintech company with over $15B in origination and less than 1% risk loss. The risk engine at EarnIn was built by Ji Peng, one of the founders of Huma.

Erbil Karaman led several growth initiatives at Facebook, including the 1Billion project to obtain Facebook’s first billion users, and was later Head of Product at Lyft.

Richard Liu was an Engineering Director for Google, where he did multiple zero-to-one projects, including GoogleFi. Later, he built a machine learning company that was acquired by Facebook.

As you can see, Huma has a veteran team with world-class backgrounds in product, data science, fintech, and machine learning, which I think bodes very well for Huma.

Go-to-Market (GTM):

RWA protocols need to think about 2 sides of the market: the asset side, and the liquidity side. The Huma team’s GTM focuses primarily on the asset side, seeking to support only the highest quality credit assets. Out of 100 potential partners evaluated, Huma has only decided to partner with 5 of them for the time being.

On the liquidity side, Huma’s team is not focusing on crypto-native retail liquidity. Instead, the first batch of liquidity will come from family offices and TradFi firms who can invest with high volume. They are also focused primarily on Asia and the Middle East, with particular interest in the Hong Kong market.

To avoid future credit default risk, Huma is focused on very short duration loans. A majority of Huma’s capital is deployed through Arf, one of the partners on their platform whose underlying asset receivable duration is 1–6 days.

Compliance:

Huma is launching with a focus on Hong Kong.

In the last few years, Hong Kong has been making strides toward becoming a global Web3 hub, and Richard believes Hong Kong will continue to be friendly with crypto out of necessity in order to remain competitive with their neighbor, Singapore.

It’ll certainly be interesting to watch Hong Kong’s crypto regime unfold, especially with the x-factor of the Chinese government potentially trying to reign them in. However, the economic incentives for pro-blockchain policy are clear.

Jia.xyz

Jia helps local businesses in emerging markets with micro-financing solutions (i.e. very small loans). For small businesses in these areas, transactions are so small that the costs associated with origination prohibit access to credit altogether. Jia’s mission is to expand financial access in these markets.

Team

Zach, the visionary co-founder and CEO behind Jia, first recognized the need for micro-financing in local markets while teaching English in countries like Brazil, India, and Ethiopia. His journey led him through various phases of microfinance, starting with grassroots community-driven initiatives in challenging environments like South Sudan and Kenya. Over time, he witnessed the emergence of mobile-based microfinance solutions. Now, at Jia, Zach channels his deep commitment into leveraging blockchain technology to make financial services more accessible. His mission is to ensure that even small businesses like roadside samosa shops can easily access credit.

The founding team met while working at Tala, a fintech company that provides credit access to underbanked populations. Jia’s former Head of Credit, Yuting Wang, is a high-powered data scientist who spent time as Head of Data at EarnIn (Sound familiar? That’s because she worked alongside Richard from Huma). Though Yuting has since moved on to Tencent, she built out Jia’s risk management criteria, and has passed the baton to Michael Dettmar, a former risk analyst at Stripe Capital (and, before that, a senior credit manager at Tala).

Go-to-Market (GTM):

One of the largest challenges for accessing small businesses in emerging markets is finding a way to reach them at scale. It is difficult to collect data and source loans, especially considering a lack of trust from locals. To circumvent these issues, Jia partners with local organizations with large networks of MSMEs, like Sarisuki, a grocery wholesaler in the Philippines, to access data on their customers and partners. Sarisuki serves tens of thousands of sari-sari-stores and, as a result, collects customer information relating to revenues, costs, cash flows, inventory levels, purchasing history, and more — all information vital for underwriting loans. Using this information, Jia develops a credit score for each potential end borrower and uses that to determine their borrowing limit.

On the supply-side, Jia offers ~15% APYs in their liquidity pools on Huma, along with warrants for their as-of-yet unlaunched token. Depending on default risk and type of financing (invoice factoring vs. inventory financing, for example), Jia may generate anywhere from 24–48% APRs (with defaults taken into account). After cost of capital and OpEx, they generate between 9–21% returns.

One major consideration the Jia team needs to take into account is FX risk — if Jia borrows dollars from LPs at 15% APR and the local currency depreciates, then they’re paying an additional cost of capital which could be extremely significant depending on the currency’s proportional value to the dollar.

Compliance:

One of the reasons Jia focuses primarily on the Philippines and Kenya is because they have been able to obtain lending licenses in these countries, which are (relatively) crypto-friendly.

They also need to comply with data privacy, fair data use, and informed consent laws, which is an especially important consideration due to how they collect their data.

Additionally, the Jia team is hesitant to release their token, waiting to see how the SEC’s crusade against crypto unfolds, the outcome of which other nations are sure to follow given the USA’s position as a global leader in financial regulation.

Helix / Helicap

Helix is another tokenized debt protocol using blockchain to provide access to off-chain private credit in emerging markets, focused primarily in South East Asia.

Helix comes out of Helicap, a Singapore-based FinTech firm providing co-investment opportunities to accredited investors.

Team

The Helix and Helicap teams have decades of collective experience across both FinTech and banking (although mostly on the technology and equity side), coming from major institutions like Goldman Sachs, Morgan Stanley, and Credit Suisse.

Helix’s CEO, Jitendra, is a foremost expert in FinTech, having spent more than a decade building out platform management and trading technology for Goldman Sachs, and for IBM before that.

On credit-specific expertise — Zhang Quan, who leads Helicap’s investment origination, due diligence, and execution, spent 2 years as a manager at Enterprise Singapore, which holds a $1.5B loan portfolio. However, I think the team could benefit from additional credit-specific expertise — I’d be more comfortable if the team added someone with 8–10 years’ experience specifically in credit underwriting. That said, Helicap’s bear market returns (10–15% annually, >50% since inception) speak for themselves. But bear in mind, thus far Helicap has exclusively focused on Web2.

Go-to-Market (GTM):

For now, Helix is focused on connecting crypto-native institutional investors (DAOs, digital family offices, digital asset managers, etc.) and high-net-worth individuals (HNWIs) with private credit opportunities. The liquidity they source from these investors is then lent to regulated non-bank financial institutions or loan originators (both traditional and digital) in Southeast Asia.

Helix’s risk management strategy involves deep analysis of the entire loan book of on-book lenders. This analysis provides insights into borrowers, loan purposes, and performance metrics, and helps in detecting any fraudulent activities.

Due to the necessity of regional knowledge in loan origination, Helix’s expansion strategy will involve establishing new offices worldwide and forming partnerships with local businesses akin to Helicap.

While retail is not an initial focus, the team will eventually consider B2B2C offerings.

Compliance:

Helix requires institutional-grade KYC/AML checks on all users and wallets and, for the time being, exclusively services accredited investors.

The team also employs a security agent in the loan structuring process ensuring additional oversight and compliance with regulatory standards.

Helicap is composed of 3 entities: Helicap Securities (licensed securities dealer), Helicap Investments (registered fund management company), and Helicap Labs (Web3 innovation center and developer of Helix, owns all the assets and IP of the protocol).

Honorable Mentions:

Credix is a decentralized credit market ecosystem, where asset originators can tokenize, securitize, and subsequently finance their assets. Like Helix, Credix works with credit FinTechs and non-bank lenders in emerging markets, focusing (for the time being) on lenders in the LATAM region. When new credit deals go live, their senior tranche is funded by liquidity providers in the protocol, with LP lock-up periods of 90 days. Credix only works with institutional borrowers, and collaborates with experienced asset managers to establish new markets and define institutional-grade eligibility criteria and credit boxes for borrowers.

DigiFi is a loan origination platform with a number of tools for automation. They’ve partnered with Scienaptic AI to provide AI-powered credit decisioning, and provide an excellent look into the revolutionary potential of blockchain rails for traditional finance.

Disclaimer：

1. This article is reprinted from [HashKey Capital Insights]. Forward the Original Title‘RWA & Tokenized Credit Pt 2: An Investor’s Thoughts on the Digital Credit Landscape’. All copyrights belong to the original author [Jack Ratkovich]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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