After the public chain project Pharos launched its consumer-loan vault this year, the prepaid deposits reached the $50 million cap within 48 hours. At the time of its official launch, there were already about $35 million in committed deposits.
More notably, Pharos is not an isolated case. Over the past few years, multiple on-chain projects have emerged that attempt to move credit assets such as consumer loans, inclusive credit, and housing loans onto the blockchain. What they target is not a newly created category of assets, but rather a long-existing traditional market that has, for a long time, not been sufficiently tokenized on-chain: global consumer credit.
A trillion-dollar cake—nobody brings a knife.
Consumer credit is not a niche asset. Euromonitor data shows that global consumer credit exceeded $21 trillion in 2025 and is expected to reach $25.5 trillion by 2030. Compared with this scale, on-chain consumer credit is still a very early market. There are not many teams that truly turn consumer lending into standardized on-chain products and have already formed a certain scale.
That’s precisely why Pharos’s consumer-lending vault—on the scale of tens of millions of dollars—is worth paying attention to: it doesn’t really open up a new DeFi lending pool. Instead, it opens a new source of assets that are huge in traditional finance, but still have low penetration on-chain.
In the past, the easiest RWAs to get on-chain were standardized assets like U.S. Treasuries and money market funds, because they have low credit risk, transparent valuation, and mature legal structures. Consumer lending is completely different: each loan is small, borrowers are dispersed, tenors differ, and underlying credit risks are more complex.
So the real difficulty in putting consumer lending on-chain has never been “how to turn loans into on-chain products.” The real problem is how to repackage tens of thousands of offline loans into standardized credit products that on-chain capital is willing to buy.
On-chain changes capital distribution.
Compared with traditional consumer lending ABS (asset-backed securities), on-chain products indeed change part of the way capital circulates.
The settlement path has changed. Investors can use stablecoins to participate in subscriptions and redemptions, so capital does not have to rely entirely on traditional cross-border wire transfers, custody, and settlement systems. For globalized capital, this can reduce some components of account infrastructure and cross-border settlement.
The way asset information is presented has changed. On-chain loan market share, transaction records, and some asset data can be continuously updated via smart contracts and product interfaces. This shortens investors’ paths to obtain information and makes it easier to perform automated verification.
The way market share is settled has changed. Standards like the asynchronous vault standard ERC-7540 are designed for assets such as real-world assets and private credit that cannot be settled instantly: investors first submit subscription or redemption requests; once the vault completes processing, they receive market-share or asset allocations. It solves the mismatch between on-chain market-share settlement and the settlement cycle of the underlying assets.
These differences solve problems of capital distribution and operational efficiency, not credit risk. The underlying loans’ bad-debt risk remains exactly the same—none of it disappears. But for consumer finance institutions, value is also found here: they don’t need to reinvent a lending system; they simply gain an additional channel to access global digital-asset funding.
Several paths are converging.
Several projects that have appeared so far may differ in assets and models, but their logic is broadly similar: emerging-market consumer lending has high interest rates (commonly 11%–30%), and traditional funding channels are limited. On-chain capital also wants to get away from the increasingly thin yields of RWA products like government bonds—so both sides fit together well.
Pharos: small-ticket consumer loans connecting Mexico, Thailand, Indonesia, Pakistan, and the Philippines. Using on-chain vault infrastructure R25 + risk curation institution Axil, it creates an on-chain product with a 92-day tenor, targeting a 13% annualized return, with an on-chain size of roughly $35 million. The product uses USDC as the settlement asset, aiming to give global on-chain capital access to consumer credit exposure that had previously been mainly underwritten/absorbed by local financial institutions and private credit funds.
Huma Finance × Tala: on the public chain Solana, make cross-border payment financing and emerging-market consumer credit into “PayFi.” Tala plans to deploy a $50 million stablecoin USDC credit facility to serve its global underserved financial inclusion clients.
Figure: U.S.-licensed consumer credit company Figure. Through its own public chain, Provenance, its originated home equity loans have already exceeded $21 billion. Figure’s latest securitization transactions also earned AAA ratings from S&P and Moody’s. Figure positions itself as capital markets infrastructure that connects loan origination, funding, and secondary-market trading—not just a way to move loans onto the blockchain. This is also the most important distinction between Figure and the earlier projects: it’s not only about putting assets on-chain; it also attempts to connect origination, capital markets, securitization, and distribution end-to-end.
Goldfinch: once a pioneering protocol for unsecured lending in emerging markets. Cumulatively it has issued more than $100 million in loans, but due to borrowers misusing funds and not repaying on time, its cumulative bad loans are about $18 million. In June of this year, the community voted to wind it down.
Broken down: for underlying assets in emerging markets or among subprime credit borrowers, the on-chain layer handles the funding entry and market-share record. The professional packaging layer in the middle: among these projects, only one truly follows the rules of traditional finance.
Goldfinch’s experience shows that on-chain transparency cannot replace offline credit capabilities. What truly determines whether a consumer lending product can operate long-term still includes borrower screening, risk pricing, post-loan monitoring, legal recourse, and default handling.
So, on the surface, these projects all look like “moving consumer lending onto the chain.” But when you break them down, they are really trying to fill different gaps.
And what’s truly scarce is that middle layer.
What’s really missing?
If you break this value chain apart, you can actually see four layers:
Underlying assets. The consumer finance institution is responsible for finding borrowers, originating loans, and completing post-loan management.
Credit and structuring. Someone needs to screen and combine large volumes of loans by tenor, credit grade, geography, and risk, and then design structures such as funds, SPVs, tranches, and credit enhancement. They must also coordinate ratings, legal documents, and subsequent distribution.
On-chain infrastructure. Vaults, on-chain market share, NAV, subscription/redemption mechanisms, custody, and on-chain records—move already-structured assets onto the chain.
The capital side. Stablecoin funds, crypto asset management institutions, family offices, and other digital-asset investors provide the funding for these products.
What’s easiest to see right now is the third layer.
But what truly determines whether a consumer-lending RWA can grow from tens of millions of dollars to a much larger scale is often the second layer.
In traditional finance, this layer is the securitization and underwriting system. If a consumer finance institution issues ABS, someone must design the transaction structure, arrange tranching and credit enhancement, and coordinate rating agencies, law firms, custodians, and institutional investors. This system has been operating for decades.
Many of the consumer-lending projects on-chain, however, have Web3 teams taking a significant portion of the work in-house: screening assets, designing vaults, doing risk curation, defining the yield structure—then selling the product directly to on-chain capital.
The issue is that this model can scale quickly, but may not be sufficient to support institutional-scale operations.
Behind Pharos, R25 and Axil essentially take on part of what happens in traditional securitization transactions: asset screening, risk curation, product structure design, and capital raising. But compared with a mature ABS market, it is still hard to see sufficiently complete data in public materials—such as breakdowns by country and by tranche/batch performance—along with independent ratings, standardized credit enhancement, and a comprehensive default-handling mechanism.
This is not to say on-chain products are necessarily unsafe. It means: on-chain solves “how assets flow.” But it has not fully solved “why assets are worth buying.”
Figure’s significance is also right here.
It doesn’t bypass traditional finance—it brings the most important “credit language” of traditional finance onto the chain. Figure has received AAA ratings from S&P and Moody’s, and its latest securitization transaction—what Figure calls the first case in the blockchain finance industry to earn this dual AAA recognition.
In other words, Figure’s proof is not that “blockchains can do lending.” What it truly demonstrates is this: when on-chain assets come with standardized loan data, securitization structures, rating mechanisms, and institutional-grade capital market infrastructure, traditional financial capital can also understand and allocate these assets in familiar ways.
Goldfinch, from the other side, illustrates the same problem: without a mature system for credit screening, continuous management, and collections/recovery, even if the on-chain capital entry is highly efficient, it cannot replace credit capabilities.
Earlier is better—what is it worth?
Flip the question: if what this value chain truly lacks is structuring and distribution capabilities, then whoever fills that gap first—the institution that can do it—will get more than just a single deal.
First, the market is still early enough.
As mentioned earlier, global consumer credit is already a mature asset market worth more than $20 trillion. But products that are truly standardized, institutionalized, and integrated into on-chain capital markets are still very few. This means the market has not yet formed mature product standards, pricing frameworks, and service pipelines—leaving room for early entrants to establish their own position.
Second: finding new money for existing assets.
What consumer finance institutions truly lack is usually not lending capability, but a continuous, stable, cost-controllable source of funding. On-chain stablecoin vault pools provide a batch of digital-asset funding that is harder to access through traditional bond markets.
If this channel truly works end-to-end, consumer finance institutions don’t need to give up their existing banks, ABS, and institutional capital. They only need to add a new funding pool alongside their existing funding structures.
Third: what’s missing is precisely mature capital-market capabilities.
The current shortcomings of on-chain consumer lending—insufficient asset disclosure and independent audits, rating and credit enhancement mechanisms not yet widely adopted, and a lack of unified market standards for legal title/perfection and default handling—line up exactly with several of the most mature stages in traditional capital markets.
Asset securitization, structured finance, credit analysis, rating coordination, and institutional distribution—these capabilities have been running in the traditional ABS market for many years. And what on-chain consumer lending truly lacks is not inventing a whole new set of capabilities; it’s taking this mature capability and moving it into a new funding channel.
Figure has already shown that on-chain assets do not exclude traditional finance’s rating and securitization frameworks. As stablecoin funding and the RWA market continue to expand, the value of this capability will only become more and more evident.
Who gets the first seat at the table?
The real competition in bringing consumer lending on-chain likely has never been “who will issue an RWA vault first.”
Pharos has already proven that on-chain capital is willing to provide tens of millions of dollars to emerging-market consumer credit. Tala and Huma Finance demonstrate that stablecoins can enter consumer finance systems serving globally underserved populations. Figure further proves that once on-chain assets have mature capital-market structures and rating frameworks, they can also enter allocation architectures familiar to traditional institutions.
All these paths point to the same question: who can transform fragmented consumer lending into on-chain credit assets that are standardized, priced, rated, and distributable?
Consumer finance institutions control the assets and risk control. Web3 teams provide on-chain infrastructure. Meanwhile, traditional capital markets have accumulated for many years the ability to structure, analyze credit, rate, and distribute—precisely the missing link between the two.
Compared with inherently highly standardized assets like government bonds and money market funds, the challenge of consumer lending is not only “how to move assets onto the chain.” The real challenge is that, before putting things on-chain, you must reorganize fragmented underlying loans into standardized products that institutional investors can understand, price, and allocate.
This is also the most worth-watching incremental opportunity in consumer lending RWA right now: on-chain infrastructure is gradually maturing, but there is still a large gap in professional capital-market capabilities that connect the asset side and institutional capital side.
This article is reproduced with authorization from: (PANews)
Original title: (The trillion-dollar consumer lending market—key players are missing)
Original author: Conflux
“$21 trillion in consumer credit is flowing onto the chain—key players are missing. Why is the Pharos consumer-lending vault worth watching?” This article was first published in “Crypto City.”