Pharos showed that capital is ready. The market, not so much.
Pharos’ consumer credit vault reached its $50 million deposit cap within 48 hours of launch, and had about $35 million in committed deposits when it went live.
The project is not an isolated case. Over the past few years, several onchain efforts have tried to move consumer loans, inclusive credit, and home loans onto blockchains. They are not trying to invent a new asset class. They are trying to bring a long-standing traditional market — global consumer credit — into a form that onchain capital can buy.
A $21 trillion market that is still early onchain
Euromonitor says global consumer credit exceeded $21 trillion in 2025 and is expected to reach $25.5 trillion by 2030.
Against that backdrop, onchain consumer credit is still early. Very few teams have turned consumer lending into standardized onchain products at meaningful scale.
That is why Pharos matters. Its vault is not really a new DeFi lending pool. It is a gateway into a huge traditional asset base that still has low onchain penetration.
Historically, the easiest RWA assets to tokenize have been U.S. Treasuries and money market funds. Credit risk is lower, pricing is clearer, and legal structures are mature. Consumer loans are different. They are small-ticket, borrower bases are fragmented, terms vary, and the underlying credit risk is more complex.
So the hard part has never been “how to put loans onchain.” The hard part is how to repackage thousands of offchain loans into standardized credit products that onchain capital actually wants to hold.
What changes onchain is distribution, not credit risk
Compared with traditional consumer loan ABS, onchain products do change parts of the funding flow.
First, settlement changes. Investors can subscribe and redeem with stablecoins, reducing reliance on cross-border wires, custodians, and legacy settlement rails. For global capital, that removes some account and settlement friction.
Second, how asset data is presented changes. Vault shares, transaction records, and some asset data can be updated continuously through smart contracts and product interfaces, shortening the information path for investors and making programmatic checks easier.
Third, the share settlement model changes. Standards such as ERC-7540 are built for real-world assets and private credit that cannot settle instantly. Investors submit subscription or redemption requests first, and the vault delivers shares or assets after processing. The point is to match onchain share mechanics with slower underlying asset settlement cycles.
These changes improve distribution and operations. They do not remove credit risk. The loans still carry default risk. But that is also where the value is for consumer lenders: they do not need to reinvent lending. They just get another funding channel that can reach global digital asset capital.
Several paths are converging
The projects already in the market all look different on the surface, but the logic is similar: emerging-market consumer loans often carry interest rates in the 11% to 30% range, traditional funding channels are limited, and onchain capital wants yield that is less compressed than Treasury-style RWA products.
Pharos connects small-ticket consumer loans across Mexico, Thailand, Indonesia, Pakistan, and the Philippines. Using R25 as vault infrastructure and Axil as the risk curator, it packages them into a 92-day onchain product targeting a 13% annualized return, with about $35 million in onchain scale. The product settles in USDC and aims to give global onchain capital exposure that used to sit mainly with local financial institutions and private credit money.
Huma Finance and Tala are taking a different route on Solana, packaging cross-border payment financing and emerging-market consumer credit into a “PayFi” model. Tala plans to deploy a $50 million USDC credit line to serve its global financial inclusion customers.
Figure is closer to capital-markets infrastructure. The U.S.-licensed consumer lender says its home equity loans originated on its own Provenance chain have topped $21 billion. Its latest securitization also received AAA ratings from S&P and Moody’s. Figure describes itself as infrastructure that connects loan origination, capital, and secondary-market trading, not just as a company that puts loans onchain.
Goldfinch is the cautionary example. Once a pioneer in emerging-market unsecured lending, it originated more than $100 million in total loans. But borrower misuse of funds and missed repayments led to about $18 million in cumulative bad debt, and the community voted to wind it down in June.
Read closely, the underlying assets sit in emerging markets or subprime borrowers, while onchain systems handle capital intake and share records. The professional packaging in the middle is where only a few projects are trying to follow traditional finance discipline.
The missing layer is the middle
The value chain can be broken into four layers.
- Layer one: underlying assets. Consumer finance firms find borrowers, extend loans, and manage servicing.
- Layer two: credit and structuring. Someone has to screen and bundle large pools of loans by tenor, credit grade, geography, and risk; design funds, SPVs, tranching, and credit enhancement; and coordinate ratings, legal documents, and downstream distribution.
- Layer three: onchain infrastructure. Vaults, onchain shares, NAV, subscription and redemption mechanics, custody, and onchain records move already-structured assets onto blockchains.
- Layer four: capital. Stablecoin funds, crypto asset managers, family offices, and other digital asset investors provide the money.
Layer three is the easiest to see. But the part that often decides whether a consumer credit RWA can move from tens of millions of dollars to something much larger is layer two.
In traditional finance, that layer is the securitization and underwriting stack. When consumer lenders issue ABS, someone has to design the structure, arrange tranches and credit enhancement, and coordinate rating agencies, law firms, custodians, and institutional investors. That ecosystem has been running for decades.
By contrast, many onchain consumer credit projects have Web3 teams taking on a large share of that work themselves: screening assets, designing vaults, curating risk, setting yield structures, and selling the product directly to onchain capital.
That model can scale quickly, but it may not be enough for institutional size.
Pharos’ R25 and Axil effectively handle part of the work that traditional securitization would assign to asset selection, risk curation, product design, and fundraising. But compared with mature ABS markets, public materials still make it hard to see complete data by country and by vintage, independent ratings, standardized credit enhancement, and a full default-resolution framework.
That does not mean onchain products are unsafe. It means the chain has solved “how assets move,” but not fully “why the assets deserve to be bought.”
Figure matters here because it does not bypass traditional finance. It brings finance’s credit language onto the chain. Figure says its latest securitization is the first case in blockchain finance to receive dual AAA recognition from S&P and Moody’s.
In other words, Figure is not proving that blockchains can do loans. It is proving that once onchain assets combine standardized loan data, securitization structures, ratings, and institutional-grade capital-market infrastructure, traditional money can understand and allocate to them in familiar ways.
Goldfinch shows the same point from the other side: without mature credit screening, ongoing management, and recovery systems, a better onchain entry point cannot replace real credit capability.
Whoever fills the gap first gets the seat
If the real missing piece is structuring and distribution, then the first institutions to fill it will be taking more than one deal.
First, the market is still early. Global consumer credit is already a mature asset class worth more than $20 trillion, yet very few products have entered onchain capital markets in a standardized, institutional way. That means the market has not yet formed mature product standards, pricing frameworks, or service chains. Early entrants can still build a position.
Second, this is about finding new money for existing assets. Consumer lenders are usually not short on lending capability. They are short on stable, ongoing, and cost-efficient funding. Stablecoin pools onchain offer a source of digital capital that traditional bond markets often cannot reach. If that channel works, lenders do not need to abandon banks, ABS, or institutional funding. They just add another pool next to the old ones.
Third, the missing piece is mature capital-market capability. The current weak spots in onchain consumer credit — incomplete asset disclosure and independent audits, limited ratings and credit enhancement, and no unified market standard for legal title and default resolution — are exactly the parts traditional capital markets have spent decades refining.
Asset securitization, structured finance, credit analysis, rating coordination, and institutional distribution are all well established in traditional ABS markets. What onchain consumer credit needs is not reinvention, but a way to bring that mature stack to a new funding channel.
Figure has already shown that onchain assets are not incompatible with traditional ratings and securitization. As stablecoin capital and the RWA market keep growing, the value of that middle layer should become even clearer.
The competition is really about who can build the middle
The real competition in onchain consumer lending may never have been about who launches the first RWA vault.
Pharos has shown that onchain capital is willing to put tens of millions of dollars into emerging-market consumer credit. Tala and Huma Finance have shown that stablecoins can enter consumer finance aimed at the globally underbanked. Figure has shown that once onchain assets have mature capital-market structures and ratings, they can fit into the allocation frameworks institutional money already understands.
All of those paths point to the same question: who can turn fragmented consumer loans into standardized, priceable, rateable, and distributable onchain credit assets?
Consumer lenders control the assets and the risk systems. Web3 teams provide the onchain rails. Traditional capital markets already have the structuring, credit analysis, ratings, and distribution capabilities that can fill the gap between them.
Compared with Treasuries or money market funds, which are already highly standardized, the challenge in consumer credit is not only putting assets onchain. Before that happens, the underlying loans have to be reorganized into standardized products that institutional investors can understand, price, and allocate to.
That is why consumer credit RWA remains one of the most interesting growth areas: onchain infrastructure is becoming more mature, but the professional capital-markets layer connecting asset originators and institutional capital still has plenty of room to step in.
This article is for reference only and does not constitute investment advice. Markets involve risk; investments should be made cautiously.
