The global credit market, valued at over $15 trillion, is a cornerstone of traditional finance. However, current underwriting practices make affordable credit inaccessible to billions with little or no credit history, including businesses and gig workers with irregular income streams. In comparison, the crypto credit market, while innovative, remains significantly smaller at approximately $35 billion. This disparity is primarily due to crypto lenders' reliance on borrower-provided collateral, which hinders broader adoption.
Credit is a crucial tool for building wealth, enabling purchases of essential items such as computers, vehicles, and homes. Relying solely on cash for these purchases can take many years, hindering individuals' ability to improve their quality of life and businesses' capacity to support their employees. What is needed is a modern adaptation of asset-based finance (ABF) that values not only tangible assets like collateral, real estate, or traditional receivables but also intangible assets such as revenue-generating potential.
There is growing recognition among financial leaders of the opportunities for growth in tokenizing both tangible and intangible real-world assets (RWAs). BlackRock, for instance, is at the forefront of tokenizing RWAs, aiming to revolutionize capital markets by enhancing asset liquidity and accessibility, driving efficiencies, and lowering costs for investors. We see an equally promising opportunity in the tokenization of intangible assets, particularly future sales.
We believe that future sales from various business types—including gig work, eCommerce, brick-and-mortar retail, hospitality, software subscriptions, royalties, licensing agreements, and service contracts—present a unique opportunity for asset-based finance. The margin created by the low cost of generating revenue from these assets allows for low-cost or even interest-free credit, while supporting attractive capital costs and delivering substantial returns for originators. Our goal is to establish the first blockchain dedicated to credit, where these assets are tokenized and exchanged for credit, with underwriting based on projected revenue, stability, and professional reputation. Funded by a decentralized network of capital pools backed by up to or more than 2X collateral, this approach aims to expand access to credit, enhance both crypto and traditional lending markets, and promote financial inclusion.
The market opportunity for exchanging future sales for credit is immense. By tokenizing and exchanging credit for just 3% of the $40 trillion in combined revenues from key industries—including the rapidly growing gig economy—the market for credit exchanges could surpass $1 trillion. Sivo DeFi aims to be the leading facilitator in this space, capturing a substantial share of the market and delivering significant value to our stakeholders.