1754 Factory, the originator of the debt pool with the most distressed loans, stated it is liquidating the assets off-chain and negotiating with borrowers for repayments.
Several $5.8 Million of loans in two lending pools are overdue on the decentralized lending protocol Centrifuge, reports by data by blockchain tech credit analytics platform rwa.xyz.
The distressed debt includes consumer loans and invoice and trade receivables financing, per Centrifuge’s loan dashboard.
Centrifuge, led by a decentralized autonomous organization (DAO), acts as a credit marketplace betwixt lenders and borrowers and relies on blockchain tech and (DeFi) (DeFi). Investment originators can turn their traditional, non- cryptocurrency assets such as mortgages, invoices or consumer credit into non-fungible crypto tokens (NFT) and use them as collateral to get financing from accredited investors for an interest payment. The protocol has grown to one of the largest blockchain-based real-world investment lending platforms with some $130 Million of total value locked on it.
Centrifuge confirmed the distressed debt in an email, but the protocol’s representatives are not involved in discussions betwixt investors and investment originators.
The unpaid loans on Centrifuge stand out between other debt-ridden lending protocols in that loans originated on the platform are supposed to be separated from cryptocurrency market turmoil.
Rival lending platforms such as Maple and TrueFi accrued bad debt a year ago because primarily digital investment trading corporations and market makers used the protocols to borrow digital currency without minimal collateral to fund their operations. As the cryptocurrency market crashed in 2022 taking some high-profile casualties, including hedge fund 3 Arrows Capital and FTX-corporate sibling quant shop Alameda Research Research, multiple borrowers became insolvent and defaulted on loans.
The most distressed lending pool on Centrifuge provides financial resources to 1754 Factory to buy bonds backed by short-term financial resources advances and microloans to French customers on the Bling fintech application. All 16 active loans in the pool worth some $5.1 Million are past the deadline to repay, with some loans being greater than 150 days late on payment, data on rwa.xyz shows.
1754 informed CoinDesk that it “is as of now liquidating its assets off-chain and engaged in negotiations with borrowers for repayments.” The lending pool is set to unwind, and investors may redeem “in the near future,” the company added.
Another pool, which payments company Alternative Payments uses to fund invoices and accounts receivable for enterprises, has some $650,000 of loans with missed payment out of the $6.4 Million outstanding. Alternative has not returned CoinDesk’s request for comment by press time.
Centrifuge’s loan dashboard likewise shows there are four loans worth $3.3 Million late with payment in its REIF pool, which provides financial resources to fund commercial real estate mortgages. Nonetheless, REIF Financial Investments, which is an financing company that concentrates on commercial real estate acquisitions, stated in an email that all loans had an option to extend with an extra 12 months, thus avoiding default. The company also mentioned that it contacted Centrifuge to update the dashboard.
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