3 lending concepts that exist in tradfi+fintech, but are lacking for on-chain crypto lending

Chris Sirise
2 min readOct 11, 2022


  1. Differentiated distribution

Fintech lending platforms have spent a decade optimising and competing on distribution channels. It will eventually be the same for web3 as lending protocols become prevalent.

Possible distribution channels:
- Application layer protocols that will have enhanced UX with a lending protocol embedded (eg. wallets)
- Use cases that reduce credit risk (eg. low risk liquidity pool yield farming)

2. Ability to collect and cost of collection

Collections through collateral liquidation or repayment initiated by the borrower is an ideal scenario. To manage risk or provide higher Loan-to-Value, there needs to be low-cost back up collection methods after the first fails.

Possible alternative collection streams:
- Integrating into on-chain income streams of the borrower
- Future payments from businesses counterparties
- Guarantor who has a history of on-chain lending and is able to give access to collateral or store of wealth

3. Quality of underwriting

Underwriting quality for on-chain lending is low mainly because of the lack of on-chain data that is useful for this purpose. There are parallels to lending in an emerging market environment where identity and credit bureau infra is lacking.

Possible ways to improve underwriting:
- Using imperfect proxies for risk (eg. historical wallet transactions, social graphing)
- Build in-house data sets by lending small amounts first. This requires risk capital

Some of these ideas require trade-offs to decentralisation or composability. But without such trade offs we might not get to lending for productive use cases, which is vital for mass market adoption of crypto.

These thoughts are a web3 add-on to the original points published by Visa Kannan from Saison Capital on embedded lending in fintech: https://lnkd.in/gAna7Jn3.



Chris Sirise

Web3/Fintech VC + Angel, Founding Partner @ Saison Capital. Invested in 50+ companies. Tweets at: https://twitter.com/chris_sirise