DeFi lending accounts for under 1% of US corporate credit market

The active loan balance on DeFi protocol Aave, at $10.9 billion, represents just 0.38% of the $2.89 trillion in outstanding corporate and industrial (C&I) loans from U.S. commercial banks, according to an analysis by CryptoSlate. The outlet noted that the two are structurally different products. Aave uses an overcollateralized model with automatic liquidation of crypto collateral, while traditional corporate loans are underwritten based on cash flow assessments such as revenue and margins. CryptoSlate projected that in an optimistic scenario, on-chain private credit could grow to between $100 billion and $300 billion, or 3.5% to 10.4% of the C&I market. However, without the necessary regulatory and underwriting infrastructure, the market is more likely to remain between $5 billion and $20 billion, which is less than 0.7% of the traditional market.