Building Global Liquidity Rails: DeFi’s Take on Private Credit

When most people think of private credit, they picture niche lending desks and opaque deals for the well-connected. But look deeper, and private credit isn’t just about yield — it’s about infrastructure. It’s how capital gets from where it is (idle, seeking returns) to where it’s needed (businesses, trade flows, real assets). Traditionally, this financial “plumbing” has been expensive, slow, and siloed. Local lenders fund local businesses; global investors are locked out unless they jump through layers of intermediaries. Transparency is limited, and settlement can take days or weeks in cross-border deals. This is exactly the kind of inefficiency that decentralized finance (DeFi) is poised to disrupt[1][2]. DeFi changes that equation.

The demand for private credit is undeniable. In just the first half of 2025, wealthy U.S. investors poured $48 billion into private credit funds — chasing yield in what has become one of the fastest-growing corners of alternative finance【1.0】. Yet while that $48B reflects the momentum flowing into traditional structures, the on-chain side of the market is also accelerating. By mid-2025, over $14B of private credit had already been tokenized, making it the single largest segment of real-world assets (RWAs) on blockchain 

From Lending Desks to DeFi Liquidity Rails

By embedding private credit into DeFi rails, capital markets become borderless and instantaneous. Consider what happens when a private credit deal moves on-chain:

• Faster Cross-Border Flow: Capital can flow across borders in minutes. A lender in New York can back a credit deal in Nairobi or Jakarta almost instantly, rather than waiting months for traditional approvals and wire transfers. Blockchain networks settle transactions in seconds rather than days, freeing up capital that would otherwise be immobilized in transit[1.1]. Even diaspora remittances that once took weeks through banks now settle near-instantly via stablecoins[2], illustrating the speed advantage of crypto rails.
• Programmable Settlement & Yield: Stablecoins and DeFi protocols become the settlement and interest payment layer. Instead of legacy bank wires, principal and interest flow through programmable assets managed by smart contracts. Investors receive tokenized interest-bearing assets (like ERC-20 tokens) that represent claims on loan repayments[3]. These can be integrated into wallets and even DeFi pools for automated yield strategies. In short, blockchain turns private loans into digital, interest-yielding tokens that can be tracked and paid out without middlemen.
• On-Chain Transparency & Underwriting: Underwriting and risk data can be verified on-chain. Rather than trust quarterly PDFs, investors can see real-time performance metrics of loans (payments made, collateral status, etc.) recorded on the blockchain. DeFi systems allow transparent reporting and auditable cash flows, with rules enforced by code rather than hidden in contracts. This transparency can build trust, especially for cross-border deals where parties might not otherwise have reliable data on each other[4][5]. A smart contract can automatically halt withdrawals if covenants are breached, or redirect payments to investors, baking loan terms into code instead of legal fine print.

In this way, tokenized credit stops being a niche product and starts becoming a DeFi-powered rail** for global liquidity. Instead of a one-off deal, it’s an always-on network. Private credit moves at the speed of the internet, not the speed of banking.

Why Emerging Markets Could Lead

Ironically, the biggest beneficiaries of these DeFi liquidity rails may not be Wall Street investors at first. They might be entrepreneurs and borrowers in markets where credit access is scarce, expensive, or overly reliant on local politics. In many emerging markets, borrowing costs are high and banks are risk-averse, leaving a huge funding gap for small businesses[6]. DeFi can help close that gap by bridging global capital to local needs.

Real-world examples are already proving this concept:

• SME Financing in Africa: Untapped Global (via its Embedded Finance arm) is partnering with DeFi platforms to fund small businesses in Africa. In September 2025, Raze Finance and Untapped launched a $100M+ tokenized private credit vault to channel global investor funds into high-performing African and other “untapped” markets[7][8]. This vault uses Raze’s compliance-first infrastructure to let a lender in London or New York invest in, say, a logistics startup in Kenya, within a compliant on-chain framework. It’s one of the largest tokenized credit initiatives to date, underscoring how emerging markets are leapfrogging traditional finance by tapping DeFi liquidity[8].
• Asset Financing for Entrepreneurs: Goldfinch, a DeFi lending protocol, has provided over $100M in loans to fintech lenders serving thousands of end-borrowers in countries like Nigeria, Kenya, India, and Indonesia[9][10]. One borrower, Tugende (a Kenyan/Ugandan asset-financing company), received a $5M credit line via Goldfinch to help motorcycle taxi drivers purchase their bikes[11]. Through global crypto liquidity, Tugende’s clients could own income-generating assets (motorbikes) and double their daily earnings[12]. This is DeFi credit directly empowering micro-entrepreneurs in East Africa – a segment traditional banks often overlook.
• Renewable Energy and Other RWA Loans: DeFi’s global liquidity is also funding projects like clean energy and fintech in emerging economies. Goldfinch, for example, financed Greenway Appliances – a distributor of efficient cookstoves in India – through on-chain loans[13]. Likewise, other platforms have enabled financing for smartphone installment companies in Latin America and solar projects in Southeast Asia. In each case, an investor sitting in San Francisco or Singapore can deploy USDC into a real business in an emerging market, earning an attractive yield while fueling growth abroad.
• Commodities and Trade Finance: It’s not just small startups. Even mid-sized industrial players are getting in on DeFi. In 2025, Ferrox Holdings, a mining company in South Africa, tokenized its invoice receivables for titanium production. By issuing the $FeTi70 token via Raze’s platform, Ferrox accessed global liquidity to finance its operations[14]. Investors worldwide (who pass KYC checks) can now directly invest in Ferrox’s commodity-backed debt and earn yields from titanium sales[15]. The CEO of Ferrox called it “unprecedented flexibility to finance our operations” and noted this would have been “impossible just a few years ago” before tokenization[16]. This exemplifies how emerging market firms are using DeFi to bypass local capital shortages, accessing a borderless pool of investors.

In markets from Africa to Southeast Asia, DeFi-based credit rails are a leapfrog technology – much like how mobile money (e.g. M-Pesa) leapfrogged traditional banking. Entrepreneurs in these regions can tap into global liquidity without waiting for local banks or politics to catch up. And investors, in turn, get diversification into high-growth markets that were previously hard to access. It’s a two-way win: borrowers get funding, and lenders earn yields often higher than they could in their home markets (private credit deals in emerging markets often yield high single or double digits to compensate for scarcity and risk).

Importantly, this is more than “blockchain with a wrapper.” It’s DeFi’s core promise – programmable, permissionless access to capital – applied to real-world credit. The technology is allowing capital to find opportunity in a way that ignores borders and bank biases. A small logistics company in Africa or a renewable energy project in Southeast Asia can prove their repayment history on-chain, building a transparent track record that attracts repeat global lenders. Meanwhile, investors diversify not just across asset classes, but across geographies that were previously out of reach.

Developed Markets: Impact Coming to Wall Street

Emerging economies may be leading out of necessity, but the impact of DeFi’s credit rails is coming for the U.S. and other large markets next. In fact, over the past two years, some of the biggest names in finance have begun tokenizing private credit and other assets on-chain, validating that this model isn’t only for frontier markets.

Consider these developments in developed markets and institutional finance:

• Wall Street Participation: BlackRock’s CEO Larry Fink (head of the world’s largest asset manager) publicly stated in 2025 that “every stock, every bond, every fund — every asset — can be tokenized”, predicting it will “revolutionize investing” by enabling trades to clear in seconds and markets to operate 24/7[1]. BlackRock backed up that belief by launching its first tokenized fund in 2024: the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which brought a ~$2.5 billion money market fund on-chain[17]. The goal was to allow instant, 24/7 settlement for institutional cash investments via Ethereum while maintaining full regulatory compliance[17].
• Tokenized Private Credit Funds: Major asset managers and banks are exploring tokenized private credit. Apollo Global Management (a large alternative asset manager) has been working with fintech firm Figure to tokenize portfolios of credit assets, contributing to Figure’s over $10B in on-chain loans[18]. JPMorgan, Franklin Templeton, and WisdomTree have all issued tokenized shares of funds or bonds on blockchain networks in pilot programs[19][20]. This institutional momentum means that the $2+ trillion traditional private credit market is slowly converging with DeFi[21]. As of mid-2025, private credit is the largest segment of the on-chain real-world asset market at ~$14B, outpacing even tokenized Treasuries[22][23].
• Surging On-Chain Volume: The on-chain real-world asset (RWA) market has exploded from just $5B in 2022 to $24B by mid-2025 (excluding stablecoins)[23]. That’s a 380% increase in a few years, largely driven by tokenized private credit issues and on-chain Treasuries. Notably, more than half of that $24B is private credit deals like loans, trade finance, and real estate debt[23]. This surge is a signal that institutions have moved beyond experiments and into deployment. BlackRock, JPMorgan, Apollo, VanEck and others “realize the future is a convergence of TradFi and on-chain finance, and they are acting on it now,” as one industry report put it[24]. In other words, the big players are getting involved, not just crypto startups.
• Efficiency Gains: Even in the U.S. and Europe, where financial infrastructure is advanced, tokenization is addressing pain points. Settlement times for bonds and loans that were T+2 or longer are being cut down drastically. For example, Nasdaq and Hamilton Lane have noted that trading tokenized securities can reduce administrative friction and open up liquidity[1][25]. A private credit fund that might have been locked up for 7-10 years could, if tokenized, offer secondary liquidity through an exchange or DeFi protocol much sooner. Billions of dollars that sit idle due to settlement delays or illiquidity can be reinvested faster when assets are on-chain[1], boosting overall market efficiency.
• Broader Access (Within Regulatory Bounds): U.S. regulations still restrict retail investor participation in private credit. However, tokenization is paving the way for a broader base of investors (e.g. qualified purchasers, international investors, etc.) to access these deals. For instance, Maple Finance’s Syrup platform is one of the few that allow non-US retail (within compliance limits) to participate in tokenized private credit pools[26]. Meanwhile, projects like Securitize and Ondo Finance have created tokenized feeder funds that let accredited or institutional investors easily get exposure to private credit and fixed-income yields via a digital token[27][28]. The trend suggests that as laws adapt, the tokenized format could democratize access to what has been an insiders’ asset class, even in developed markets. We’re already seeing early signs: a tokenized bond in South Africa attracted 65% of its funding from individual investors, many of whom couldn’t invest in such bonds before[29]. The U.S. and Europe are likely next as regulations evolve.

In summary, the U.S. and large markets are not far behind the emerging-market pioneers. High-profile endorsements, growing on-chain volumes, and the tangible benefits of speed and liquidity are driving adoption. The same rails that let a Kenyan business get funded by a DAO will eventually streamline how an American mid-market company raises mezzanine debt or how a European fund sells loan exposure. It’s all converging. In 2024, JPMorgan called tokenization a “new frontier” despite some early disappointments[30] – by 2025, it’s clear that frontier is being crossed. The infrastructure being built now will likely underpin mainstream credit markets in the near future.

Risks — and Why Infrastructure Matters

It’s easy to get caught up in the utopia, but risks are real. New rails don’t eliminate old problems, and they introduce some new ones. Here are key risks to consider, and why the right infrastructure is essential to mitigate them:

• Credit Quality Remains Key: A bad loan is still a bad loan, even if tokenized. If borrowers default or if underwriting standards are poor, investors lose money just the same. DeFi doesn’t magically make credit risk disappear. For example, some early crypto-credit protocols faced defaults (e.g. certain Maple Finance lending pools had loans go bad in 2022 during the crypto market downturn). Tokenization can even attract riskier borrowers who can’t get bank loans, so rigorous underwriting and due diligence are paramount[31][32]. This is why platforms like Goldfinch vet borrowers through a community of “backers” who take first-loss positions[5], and why Raze and others integrate on-chain verification of borrower data rather than blindly issuing tokens. Good infrastructure will include credit scoring, background checks, and perhaps insurance or reserve funds to cover losses – just as in traditional finance, but augmented with real-time monitoring.
• Liquidity Illusion: Just because an asset is tokenized doesn’t guarantee someone will want to buy it. Thin liquidity is a risk – investors might assume they can sell their tokenized loan exposure anytime, only to find few buyers in a downturn. DeFi markets need depth; tokens alone don’t solve that. We’ve seen “permissioned” DeFi pools for institutions launch with fanfare but then attract little activity (for instance, Aave’s institutional pool, Aave Arc, reportedly had very low usage)[33]. Market makers and secondary platforms are needed to truly make these assets tradable. The good news is that infrastructure is being built: some projects are focusing on secondary trading venues for private credit tokens, and Raze’s platform is designed to “power future secondary market liquidity” by connecting to exchanges and brokers[34][35]. Still, until the ecosystem matures, investors should treat tokenized private credit as relatively illiquid and size positions accordingly.
• Regulatory Fragmentation: One country’s approval is another country’s ban. The regulatory landscape for tokenized securities is patchy. A tokenized loan might be considered a security in the U.S. (thus requiring SEC-compliant offering and only accredited investors), whereas another jurisdiction might welcome it in a sandbox, and yet another might outlaw it entirely. Navigating these differences is non-trivial. In fact, many tokenized credit offerings today geofence U.S. investors by default due to uncertainty in U.S. crypto regulations[15]. There’s progress – for example, the SEC in April 2025 issued guidance on how tokenized assets can adhere to disclosure rules[36], and jurisdictions like Dubai, Singapore, and Europe’s MiCA are providing clearer frameworks. But until global harmony emerges, compliance infrastructure is critical. That’s why platforms like Raze are not just minting tokens — they’re building systems to enforce compliance across 140+ countries, validate investors (KYC/AML), and integrate legal rules into the code[37][38]. Without that scaffolding, a well-intentioned tokenized credit deal could quickly run afoul of law and “collapse into noise.”
• Technology and Smart Contract Risk: Entrusting deals to smart contracts introduces operational risk. Bugs in code, oracle failures (providing off-chain data on-chain), or vulnerabilities can be exploited. A flaw in a loan smart contract could theoretically lock up funds or send money to the wrong address. Rug pulls or fraud are possible if proper controls aren’t in place (though harder when real assets and legal contracts are involved). Robust infrastructure means thorough audits, insured custody of collateral (if any), and fail-safes. For instance, some platforms use permissioned chains or require multi-sig approvals for certain actions to reduce tech risk[39]. The use of purpose-built networks (like Raze using Redbelly for instant finality[40]) and on-chain verifiable credentials helps instill confidence that the tech is enterprise-grade. As this sector matures, we expect to see standardization of smart contract templates for loans and the involvement of insurers or underwriters to cover smart contract risk.

In short, infrastructure matters greatly. It’s not enough to slap a token on a loan and call it a day. The platforms leading this space (e.g. Raze, Centrifuge, Maple, Goldfinch, Tradable, etc.) are those investing in the plumbing – compliance layers, identity verification, risk management dashboards, and integration with traditional systems. Without these, tokenized private credit would be a shaky tower. With them, it’s looking like a solid bridge between TradFi and DeFi.

Platforms like Raze exemplify this approach: they combine built-in compliance (KYC/AML, investor accreditation checks)[37], investor onboarding workflows, and smart contracts that automate yield distribution and reporting[35]. They’ve shown in cases like Ferrox and Untapped that complex real-world deals can be packaged into a token that behaves in a compliant, transparent way. This kind of infrastructure — essentially a DeFi-native yet regulator-ready “operating system” for private credit — is what turns a risky idea into a viable market. It’s the guardrail that ensures tokenization fulfills its promise without flying off the track.

The Bigger Picture

Zooming out, the evolution we’re witnessing is that crypto is moving from speculation to utility, from coins to rails. The first phase of crypto was largely about speculative assets (Bitcoin as “digital gold”, ICOs, meme coins, etc.). The next phase is about using blockchain rails to modernize how value moves in the real world.

Think of the progression:

• Bitcoin gave us digital gold – a store of value outside any state.
• Ethereum gave us programmable money – the ability to write code for financial logic (loans, swaps, derivatives) on-chain.
• DeFi is now giving us programmable capital markets – the ability to recreate and improve traditional financial products (loans, bonds, credit, equities) on an open, global network.

Tokenized private credit may be DeFi’s most practical use case yet because it marries significant real-world demand (companies need funding; investors seek yield) with the efficiencies of blockchain. Unlike, say, meme coin trading, this is finance 101 – borrowing and lending – but done on a 21st-century platform. It’s taking the infrastructure of credit and upgrading it, rather than inventing an entirely new asset class.

We are already seeing the lines blur: real-world assets (RWAs) on-chain are now one of crypto’s fastest-growing sectors, reaching that $24B milestone by 2025 with counter-cyclical growth even as the broader crypto market was down[41][42]. In other words, while speculative crypto assets saw drawdowns, real-world-backed assets kept climbing as more value was tokenized. This hints that the future of blockchain isn’t about everyone trading dog coins, it’s about blockchain becoming invisible but ubiquitous in the financial system.

In 10 years, the conversation may not be about whether you “believe” in blockchain. It will be about whether your credit infrastructure is plugged into DeFi — because that’s the only way capital will move fast enough to meet global demand. If a private credit fund in 2035 is still faxing paperwork and waiting 5 days for international wires, it will lose out to a fund that tokenizes its deals and taps liquidity from a global investor base in real-time. As Larry Fink said, markets that don’t need to close and transactions that clear in seconds can unleash tremendous economic growth[1]. No forward-thinking institution wants to be left on the slower, siloed system.

We’re already seeing the tipping point: Fidelity, Franklin Templeton, and other conservative giants have launched on-chain funds or tokenized offerings, signaling that on-chain finance is moving from fringe to mainstream[24][43]. And as more assets (gold, real estate, invoices, you name it) come on-chain, we could be looking at trillions of dollars in tokenized value by the next decade[44]. DeFi’s challenge (and opportunity) is to provide the rails and the rules to support that explosion.

👉 Private credit isn’t just yield. It’s infrastructure. And DeFi is the hero building the rail it has been waiting for. The marriage of on-chain technology with private credit is transforming a slow, fragmented system into a fast, global, and transparent network. We have gone from imagining a new financial system to actually constructing the bridges between legacy finance and DeFi. Those bridges – the global liquidity rails – are being built today, in emerging markets and on Wall Street alike. The only question is: in the coming era, will you ride the new rails or get left behind on the old road?

Sources:

• Alternative Credit Investor -[1.0]
• Mercy Corps Ventures – Responsible DeFi Lending: Why we invested in Goldfinch[4][9]
• The Defiant – Goldfinch Hits $100M in Loans as Crypto-to-Real World Model Picks Up Steam[10][45]
• The Defiant – Private Credit Leads RWA Tokenization Boom, $24B Market[23][18]
• Blockworks – How Private Credit Tokenization is Leading the Race[1][21]
• Raze Finance – Untapped Global $100M Tokenized Credit Vault (Press Release)[7][8]
• Raze Finance – Ferrox Holdings Tokenized Mining Invoices (Press Release)[14][15]
• International Banker – Tokenization to Unlock Africa’s Capital Markets[29][2]

Qubit Capital – Institutional DeFi and Tokenized Private Credit[46][32]

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About Raze Finance

Raze provides the infrastructure layer for tokenized real-world assets, offering an end-to-end platform for compliant issuance, distribution, and management of tokenized private credit, private equity, real estate, and commodities. With built-in regulatory compliance, investor onboarding, and smart contract automation, Raze enables institutions and asset originators to unlock value, scale distribution, and deliver real yield globally.

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Press Contact:
Brian Anderson
Media Relations, Raze Finance
‍info@raze.finance
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