The Future of Private Credit

Credbull’s Approach to Democratizing High Performance for Web 3.0
3 min readNov 9, 2023

In an era where traditional investments are increasingly volatile, the search for reliable performance is paramount. Join us and step into the world of democratising private credit as an asset class, and how Credbull delivers 10% Fixed Yield on TVL regardless of market conditions.

Since the 2008 financial crisis, Banks have faced tighter capital adequacy standards by Basel III, resulting in stricter lending practices and a devastating impact on the ability of small and medium size enterprises (SMEs) to access critical working capital. These increasingly harsh conditions have been acutely visible in invoice factoring and related working capital solutions for cross-border trade, critical cash flow solutions that many SMEs require to produce and distribute their products. SMEs today face a staggering funding gap of $2.5 trillion globally.

To address this burgeoning gap, private credit as an asset class has grown rapidly from $300 billion in 2010 to $1.2 trillion today, and is projected to reach $2.5 trillion by 2030. This rapid growth is a result of its performance and unique attributes, including consistently outperforming traditional markets on a risk-adjusted basis, short-term liquidity and diversification of its underlying transactions, low default rate and loan loss ratio, and low correlation with traditional asset classes and market cycles.

Individual Investment Options Are Bleak

Despite private credit’s favourable track record, this high performing asset class has largely been reserved for institutional investors and high net worth individuals, leaving individual investors with underperforming or volatile investment solutions.

In TradeFi, mutual funds and fixed income dominate the landscape, with the former accounting for $70 trillion in AUM globally while the latter at $100+ trillion. Yet, 85% of active investment managers underperform their own market index every year while charging 20–30% of gross returns in fees, and fixed income offen delivers yield well below the inflation rate, ultimately providing a loss of real value on the underlying investment. In DeFi, while it has achieved significant progress in providing broader access to compelling investment solutions, the yield has proven to be vulnerable to market sentiment, fluctuating based on momentum and the available liquidity within niche segments. And we all have witnessed the risks associated with bad actors over the last few years, leaving investors with $10s of billions in lost capital.

We Can Do Better: Rewriting the Rules of the Game

Credbull builds on DeFi’s promise of providing access and transparency while breaking down the barriers to private credit as an asset class and focusing primarily on invoice factoring as a sector. But we don’t stop there. Credbull takes it one step further by sourcing, underwriting and issuing the actual credit facilities to high creditworthy SMEs. With its entrenched distribution channels in emerging and developed markets, and multi-layered proprietary risk management framework, SCRPT 360®, Credbull is vertically integrated in real world assets and fully governed by the community, including voting and real-time visibility on the type of transactions that are eligible for funding.

In our next article, we will delve into the mechanics of SCRPT 360® and how the Credbull community plays a critical role in risk management.

Connect with Credbull

Credbull’s upcoming integrated platform is not just a product; it’s a movement toward a more inclusive and fair financial system, and taking control of our financial independence. We invite you to be part of this exciting journey.

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Credbull is the first fully integrated and transparent DeFi Credit Platform in SME Real World Assets