Avalanche Revolutionizes Private Credit Markets with Clearpool Finance 

• Clearpool Finance has announced that it would be integrating its credit Vaults on Avalanche after initially launching on Banxa.
• This is part of its plans to provide greater loan efficiency for lenders and borrowers. 

Leading decentralized finance marketplace Clearpool Finance has announced a groundbreaking development where its Credit Vaults would be launching on the Avalanche network (AVAX). This collaboration implies that the exclusive offer of uncollateralized borrowing for institutions would be available on Avalanche. On top of that, Credit Vaults would host Clearpool’s first RWA pool on the network.

For context, Credit Vaults was designed to ensure that lending efficiency is enhanced through the utilization of Real-World Assets (RWAs) like private credit. Initially, the Credit Vault was launched by a publicly listed (TSX.V: BNXA, OTCQX: BNXAF) global infrastructure provider Banxa. 

Interestingly, the recent collaboration with Avalanche adds up to the explosive growth of RWAs on the blockchain platform. It also aligns with the vision of bringing tokenized assets and greater utility to the Avalanche ecosystem. Its effort to facilitate RWA growth on its network is evident in the emergency of Avalanche Evergreen Subnets in 2023. This was meant to offer the services of tokenization testing and the merits of on-chain finance to financial services firms.

The Evergreen subnet was leveraged by J.P. Morgan’s Onyx to explore how tokenization could help automate portfolio management. The Citi and DTCC Digital Assets also used the Avalanche Spruce network recently to test the importance of private market tokenization with renowned asset managers Wellington Management and WisdomTree. 

Clearpool and Avalanche Comment on this Collaboration

The tokenized private credit market is already worth billions of dollars.
However, the total active loan value of $7.9B is still miniscule compared to the size of the market in TradFi, where investing into private credit loans is a $1.6T market.@ClearpoolFin is hoping to… pic.twitter.com/ZZwwWXnt4p— Avalanche (@avax) June 6, 2024

Clearpool tokenizes loans made to Banxa for onward transfer to the on-chain. In return, lenders receive cpToken as a representation of their stake in the pool with interest automatically compounding. Also, Banxa’s Credit Vault offers a seven-day repayment period and extra rewards in AVAX tokens.

Commenting on this, Jakob Kronbichler, CEO & Co-founder of Clearpool disclosed that this collaboration is a major milestone for his company and the RWA sector in general. 

Launching Credit Vaults on Avalanche is a major milestone for Clearpool and the RWA sector as we truly pioneer migrating credit on-chain. Working with prominent players such as the listed fintech, Banxa, and experienced credit fund, Cauris validates the enormous potential of Credit Vaults to revolutionize the RWA DeFi space and expedite institutional adoption.

It is important to note that the permissionless pool of Clearpool led to the introduction of private credit yield to DeFi, specifically, trading firms and market makers. The Credit Vaults takes care of the influx of new on-chain borrowers such as fintech and payment companies. This is done via stable rates and stickier liquidity. Clearpool also uses Credit Vault to enable borrowers to set their terms such as interest rates and repayment frequencies. It also enables higher lending APYs via 100% utilization, pool revenue, and increased lending volume, making interest rates more convenient for lenders. 

Morgan Krupetsky, Director of BD Institutions and Capital Markets at Ava Labs commented on this. 

Avalanche is the ideal platform to support the launch of Clearpool’s Credit Vaults. The collaboration with Clearpool showcases a mutual commitment to developing innovative digital financial products, and we are excited to welcome new RWA use cases into the ecosystem.

At press time, AVAX was trading at $33 after declining by 7.9% in the last 24 hours, and 8% in the last seven days.