The Liquid Credit Backed Stablecoin
Making Private Credit Liquid
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Stablecoins are Booming
Fastest growing asset class in DeFi - Yield Bearing Stables
Private Credit is Booming
Growth of private credit markets from 2002 to 2024
Source: Federal Reserve Board (FEDS Notes) - *2024 data as of Q2
Where are all the Credit Backed Stablecoins?
Default Risk
Any borrower could default on their debt
- Private Credit expects 1 - 2% annual default rates
- While small, they are still big enough to deplete typical protocol reserve funds
- A vanilla Credit Backed Stablecoin would not be able to withstand these losses
Low Liquidity
Private credit is typically low liquidity
- The most liquid funds allow redemptions quarterly at best
- Funds often have 6-12 month lock-ups before any redemption requests can be made
- Most funds only make 5% of fund assets available for each redemption cycle
- Exits via secondary market sales are typically conducted at steep discounts
Solving Default Risk
Covering credit losses provides stablecoin stability
Probability of Default
Private credit carries a risk where borrowers will not repay.
Source: Federal Reserve, KBRA DLD (Oct 2023)
Liquid Tokens Cover Credit Risk
Third-party governance tokens absorb credit losses
Yield for Deprived Assets
Provides governance token returns
Low Cost of Capital
Fewer yield opportunities equates to a lower cost
EARN USDC APY ON
...Solving Low Liquidity
Utilising DeFi mechanics to solve private credit liquidity
Liquidity Buffer
Liquidity Buffer
Maintain >25% liquid assets for speedy redemptions
Liquidity Matching
Liquidity Matching
Lock sTGUSD for 7/90/180 days to unlock boosted yields
90-180 DAYS
Short-term Credit
Short-term Credit
Asset-backed with 90-120 day maturities for optimal liquidity management
ASSET BACKED
Liquidity Backstop
Liquidity Backstop
Open auction to purchase private credit exposures at a discount
≥ 30% ANNUALISED
sTGUSD is the missing link
Through liquidity mechanisms, and risk transfers, sTGUSD provides easy access to liquid private credit based yields