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The Holy Grail of DeFi Lending: Undercollateralized Loans — by Treehouse Research

Clearpool was featured in this insightful research piece by Treehouse Research. The article dives deep into the “Real Yield” narrative and the burgeoning world of undercollateralized lending.

  • How Credit Markets like Clearpool are critical as TradFi enters DeFi
  • Credit markets in TradFi have a size of around US$91T, magnitudes larger than TradFi equity markets and DeFi money markets — demonstrating enormous room for growth
  • Defaults of CeFi lenders such as Celsius enabled DeFi credit protocols like Clearpool to fill the demand and innovate
  • Surveys show that 97% of investors are looking to maintain or increase their exposure to credit markets moving forwards
  • Protocols like Clearpool provide act as a critical infrastructure layer by providing the necessary risk assessment and credit scoring expertise required before loan origination, as well as making protocol-level decisions like interest rate mechanisms
  • The inefficiencies of TradFi’s archaic processes have been streamlined by current DeFi credit models, providing borrowers with the operational flexibility to borrow and repay 24/7
  • Although DeFi credit protocols serve only a niche market today, there are a couple of pathways leading to larger-scale adoption
  • The DeFi credit market has demonstrated growth momentum and the ability to nurture innovation. Immensely popular in TradFi, credit risk could become the next heavyweight in the “real yield” narrative.

Click here to read the full article.



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