Private credit has been one of the most talked-about asset classes when it comes to tokenisation, and for good reason. What has historically been an illiquid and hard-to-access asset class for retail investors is now being brought onchain and made liquid with much lower barriers to entry.
The growth of the sector over the past year underscores the rapid pace of this shift. In March 2025, the onchain market cap of private credit was only around $25 million. At the time of writing, however, the onchain market cap has expanded to $1.675 billion.
What is private credit, and why is it important?
To understand the significance of bringing private credit onchain, it is important to first understand what private credit actually is, how it developed, and the size of the existing market.
What private credit actually is
Private credit generally means lending by nonbank institutions outside public debt markets. Said another way, instead of raising money through a broadly syndicated loan or a public bond issuance, borrowers receive financing directly from private lenders such as credit funds, business development companies, insurers, and other alternative asset managers.
The market has historically focused on middle-market companies, but over time, it has expanded well beyond that niche.
In practice, private credit is often associated most closely with direct lending, and for good reason. With these transactions, a private lender or a small group of lenders negotiates directly with a borrower and provides a tailored loan, often with floating rates and senior secured terms.