On-Chain Solutions Poised to Transform $6.1 Trillion Private Credit Market

Private credit—particularly asset-backed finance (ABF)—has ballooned into a $6.1 trillion sector, with Apollo Global Management projecting a $20 trillion addressable market. Yet archaic systems plague the industry. Funds still rely on manual processes like Excel tracking, creating middle-office inefficiencies and inflating financing costs by up to 30%.

The root issue lies in ABF's structural complexity. Unlike corporate credit, which leans on balance sheets, ABF depends on contractual cash flows from assets like BNPL loans or supply chain receivables. Major players like Apollo and Blackstone craft bespoke facilities for originators, but capital allocation remains sluggish. Weekly drawdowns leave funds idle, forcing originators to bridge gaps with expensive equity while investors suffer cash drag.

This operational quagmire mirrors sending handwritten timesheets via mail—an absurdity in 2024. Blockchain rails could automate covenant monitoring and cash FLOW verification, replacing armies of operations staff with smart contracts. The stage is set for crypto-native solutions to unlock billions in trapped liquidity.