The tokenized private credit opportunity
Our biggest report on the tokenized private credit opportunity yet.
Private credit grew from $1.1 trillion in 2010 to $2 trillion at the start of 2025.
Tokenized private credit hit $20.48B in active loan value by late 2025, up from under $8.9B a year earlier. That’s 56% growth in twelve months. Strip out stablecoins and repos, and private credit is now 61% of everything tokenized.
So this is the largest and fastest-growing segment of the tokenization market. And I keep having conversations with smart people, allocators included, who can’t tell me what’s actually being tokenized in these deals.
That is why we wrote our new report together with Avalanche.
The distinction everyone misses
Here’s the uncomfortable truth about most “tokenized private credit” to date: it tokenizes the wrapper, not the loan.
A fund share gets minted as a token. The token gets looped through DeFi yield strategies. Leverage goes up, returns amplify on the way up. Meanwhile the underlying credit sits untouched. The borrower notices nothing. The originator still knows far more than the investor does.
Tokenizing the substance means the loan itself changes shape. Collateral becomes a verifiable on-chain object. Repayments settle in stablecoins as they happen. Covenants run as code instead of language a lawyer checks quarterly, and the servicing waterfall executes itself.
The report draws a hard line between these two approaches, because I think the second one is where the next decade of value sits. The first one is mostly leverage wearing a costume.
Why this matters now
Private credit has plenty of capital. It just doesn’t reach the borrowers who need it. The ADB puts the global trade finance shortfall at $2.5 trillion in 2025, the same number as 2022, with SMEs hit hardest. And the asset class still runs on old rails: settlement in 2 to 30 days, quarterly PDF reporting, manual waterfalls, securitizations that take weeks to close.
Tricolor and First Brands showed what that costs. In both cases the same assets got pledged more than once while the portfolios kept looking fine on paper. Reporting infrastructure sits too far downstream to catch that. On a shared ledger, the second pledge fails at origination instead of surfacing in the workout.
And the numbers back the demand: per Coalition Greenwich, 70% of wealth and asset managers cite liquidity as the reason they don’t allocate more to private credit; 56% cite fees. Tokenization attacks both, T+0 redemptions and protocol fees of 0.2-0.4% of AUM instead of the traditional slice.
What actually changes (and what it doesn’t)
We mapped private credit by underwriting logic. Asset-backed lending tokenizes well. Enterprise and project lending, less so.
Where the technology bites: funding drops from 5-15 days to 1-3. Distributions go from as long as T+30 to near real-time. Secondary transfers shrink from weeks to hours, refinancing from 4-8 weeks to 1-2.
What doesn’t change: a bad loan stays bad on-chain. A blockchain can’t seize a factory. Enforcement lives off-chain, which is why the legal plumbing matters more than the tech. UCC Article 12 is now law in 33 US states (New York signed on December 5, 2025), and MLETR plus the UK Electronic Trade Documents Act cover much of the cross-border gap. The report walks through all three.
Who’s actually winning
Hundreds of participants, mostly pilots. The credible platforms have converged on one architecture: legal teeth off-chain, automation on-chain. We go deep on three of them:
Valinor, ex-Blackstone credit discipline applied to digital-native lending. Invests its own capital alongside LPs. $25M raised, backed by Castle Island, Apollo, and Susquehanna.
Grove, $2.6B TVL, the capital allocation engine behind institutional stablecoins. Anchored the first tokenized crypto-backed CLO ($75M Galaxy CLO 2025-1, with a $50M Grove allocation on Avalanche) alongside $1B into Janus Henderson’s tokenized JAAA strategy.
Fence, the “operating system for credit.” €50M deployed with BBVA Spark, 80%+ back-office cost reduction, 30%+ interest savings, 100K transactions per month.
Each case study covers the deal structures and the economics. You won’t get that from a press release.
The bottom line
The loans, the borrowers, and the credit risk all stay the same. What changes is what it costs to move capital and how fast clean risk data reaches the people pricing it.
Cheaper movement compresses the cost of credit. Cleaner data compresses the risk premium investors demand. Put those together and the asset class can push more credit into the real economy at lower cost.
Defaults in infrastructure get set early and then last for decades. They’re being set right now.
🚨Inside the full report:
Why private credit grew and why Basel III Endgame makes the shift permanent
The wrapper vs. substance framework for evaluating any tokenized credit deal
From term sheet to token: the five-phase lifecycle of an on-chain loan
The enforcement gap and how UCC Article 12, MLETR, and the UK ETDA are closing it
Full case studies: Valinor, Grove, Fence
The complete market map: platforms, chains, and issuers
That’s all for now, folks.
– Marc & Team
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