The Hitchhiker's Guide to Onchain Credit (6 minute read)
A comprehensive taxonomy maps 160+ protocols across the onchain credit ecosystem, categorizing how traditional credit products are being tokenized and integrated into DeFi.
What: Serotonin's research team mapped the entire onchain credit landscape into four main layers—Credit Issuance, Capital Allocation, Infrastructure, and Risk Management—with 19 sub-categories covering everything from tokenized mortgages to risk coverage protocols.
Why it matters: This framework reveals how real-world credit (institutional funds, mortgages, infrastructure financing) is being brought onchain and made composable with DeFi protocols, creating new yield opportunities while introducing traditional finance liquidity and risk management challenges to crypto markets.
Takeaway: The full "State of Onchain Credit" report was scheduled for release on April 28, 2026, available through Serotonin's platform at se.ro.
Deep dive
- Credit Issuance layer includes institutional giants like Apollo ($938B+ AUM) tokenizing private credit funds as feeder tokens ($ACRED, $ACRDX) accessible only to KYC-accredited investors, but these assets become DeFi collateral on platforms like Morpho and Kamino
- Figure leads tokenized offchain credit by using its Provenance blockchain to originate and track Home Equity Lines of Credit (HELOCs), reducing funding cycles from months to days and saving ~120 basis points in costs through eliminated intermediaries
- Onchain origination protocols like Maple Finance ($syrupUSDC yielding 4.8%) extend overcollateralized crypto-backed loans to institutions, while newer models like Cap use shared security networks (Symbiotic) for collateralization instead of traditional crypto assets
- InfraFi and PayFi represent emerging niches: InfraFi protocols (USDAI, Daylight) finance physical infrastructure like GPUs and solar panels, while PayFi protocols (Credit Coop, BlackOpal) offer asset-backed financing from payment receivables with yields exceeding 10% APY
- Sky ecosystem dominates capital allocation with Agent protocols like Grove Finance deploying $586.6M across onchain credit assets, contributing to Sky's 3.65% savings rate and playing an outsized role in market liquidity
- Vault curators like Steakhouse Financial actively manage risk and allocate liquidity across money markets, though allocations shifted drastically following the recent Aave exploit mentioned in the article
- Money markets provide critical infrastructure: Morpho and Kamino lead in onchain credit collateral activity, enabling high-yield assets to be borrowed against and looped, with rates doubling the average DeFi lending rate (over 6% vs. under 3%)
- Liquidity remains the biggest risk management challenge: protocols like 3F and Multiliquid are building mechanisms for instant redemption and liquidation by purchasing distressed assets at discounts and holding through redemption cycles
- Tranching protocols like Cork split yield-bearing tokens into junior (higher risk premium) and senior (protected) tranches, with the spread itself helping price the underlying risk being transferred between participants
- Reserve verification uses zero-knowledge proofs: Accountable offers real-time proof-of-solvency data feeds verifying total offchain and onchain assets while preserving privacy through cryptographic proofs
- Shared security networks are entering credit: Symbiotic and Eigen's restaked assets now provide risk coverage for protocols like Cap and Catalysis, representing a novel approach to insurance beyond traditional models like Nexus Mutual
- The taxonomy reveals infrastructure gaps: while tokenization and issuance are well-developed with 67 players across Credit Issuance alone, risk management (especially liquidity and coverage) remains less mature with only 29 players total
Decoder
- InfraFi (Infrastructure Finance): Protocols that source onchain capital to finance real-world physical infrastructure like GPUs, solar panels, and batteries
- PayFi (Payment Finance): Protocols providing asset-backed financing secured by payment receivables, similar to factoring in traditional finance
- SPV (Special Purpose Vehicle): A legal entity created to hold specific assets or investments, isolating financial risk from the parent company
- HELOC (Home Equity Line of Credit): A revolving credit line secured by home equity, allowing homeowners to borrow against their property value
- Represented Assets: Tokenized assets that cannot be freely transferred between wallets, serving mainly as proof of ownership
- Distributed Assets: Tokenized assets that can be transferred and used across DeFi protocols, enabling composability
- Tranching: Splitting a financial product into tiers with different risk/reward profiles, where junior tranches absorb losses first in exchange for higher yields
- NAV (Net Asset Value): The per-share value of a fund calculated by dividing total assets minus liabilities by number of shares
- Proof-of-Reserve: Cryptographic verification that an entity holds the assets it claims to hold, without revealing sensitive details
- Restaking: Reusing already-staked tokens as collateral for additional services or security guarantees, pioneered by protocols like EigenLayer
- Vault Curator: An entity that actively manages and allocates capital across different DeFi positions on behalf of depositors
Original article
There are over 160 startups, protocols, and institutions across the onchain credit ecosystem, categorized into four main layers. These are Credit Issuance, Capital Allocation, Infrastructure, and Risk Management, with 19 sub-categories. The Credit Issuance layer spans institutional credit funds, tokenized offchain credit, and onchain origination models, including overcollateralized lending, P2P, InfraFi, and PayFi. This report provides a useful mental model for anyone trying to understand who the players are, which categories matter, and where the gaps remain in the onchain credit stack.