Crypto Lender Goldfinch Hits $100 Million in Loans as Crypto-to-Real World Takes Off

Following closely after expanding rewards, making accredited investors accessible, and adding Curve LP staking support, Goldfinch passes milestones in real-world staking.

Bishal Kumar Chanda3 min read
Crypto Lender Goldfinch Hits $100 Million in Loans as Crypto-to-Real World Takes Off

Following closely after expanding rewards, making accredited investors accessible, and adding Curve LP staking support, Goldfinch passes milestones in real-world staking.

Goldfinch Brings Crypto Loan To The Real World

Goldfinch is a global credit protocol that “brings crypto loans to the real world.” On April 26, Goldfinch passed $100 million USDC in active loans distributed in emerging markets. It represents a 100-time increase in active loans since February last year. In addition, the milestone indicates the demand for unsecured capital, especially in developing countries.

Active loans since Goldfinch's inception. Credit: Dune Analytics

According to Goldfinch co-founder West, “Goldfinch is offering these real loans that are tied to real world activity [and] still has really good yields.” Also, he pointed out that yields on protocols like Compound Finance are around 2%, compared to Goldfinch’s 8% for its senior tranche. While the senior tranche is for passive investors, the protocol also offers a high-yield junior tranche for “backers” who want to negotiate on a per-investment basis.

Goldfinch met the $100 million milestone just after giving access to US accredited investors and non-US entities to participate as lenders. Thus, broadening the community of those who can earn off-chain yields on stablecoin deposits beyond the protocol’s initial launch segment.

Goldfinch Customer Wallets

For smaller borrowers, unsecured lending is a high-risk business. Moreover, the platform doesn’t have to worry about just the defaults but also the regulators. Regulators can always come up with new rules to safeguard borrowers, raising the cost of capital and daily business operations. Also, adding crypto volatility to the mix would give us a clear picture of the risk.

According to West, Goldfinch’s loans are not related to demand within crypto, so its rates differ from those stemming from it. Instead, Goldfinch gives out loans to companies like Greenway, which distributes highly efficient and safe cookstoves in India. In addition, the platform gives out loans to 18 nations, including Brazil and Kenya.

Moreover, this model has attracted investors like Andreessen Horowitz, which led a $25M investment round in the startup. A16z General Partner Arianna Simpson stated, “Goldfinch is a decentralized credit platform that broadens the pool of potential lenders beyond just banks.”

Goldfinch Credit Protocol

According to West, “Basically all the loans we do are secured and in fact are collateralized,” Thus, West prefers calling Goldfinch a “credit protocol,” rather than an “unsecured lending protocol.”

90-day performance of GFI. Credit: CoinGecko

However, Goldfinch’s native token is plummeting despite the growing loan volume. According to CoinGecko, since it went live on January 11, it has lost almost half of its value. Of course, the entire DeFi market is drawing with the market cap for the top 100 names down 16%.

Final Say

However, Goldfinch is not alone in this race. According to West, projects like Centrifuge, Maple Finance, and TrueFi are moving towards the unsecured loan space. Goldfinch’s success is seen as a harbinger of the industry’s shift to DeFi for economic expansion in emerging markets. While crypto lending is full of payment and regulatory risks, Goldfinch’s $100M milestone indicates that credit protocols with real-world utility are the new growth area in crypto.

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