Goldfinch Launches New DeFi Pool: Prime

Goldfinch, a decentralized finance protocol supported by major investors like a16z Crypto and Coinbase Ventures, has introduced a new pool called Prime. This initiative aims to provide users with on-chain exposure to private credit funds.

Overview of Goldfinch Prime

The Goldfinch Prime pool is designed for non-U.S. investors, granting them access to thousands of loans from top private credit firms, including Apollo Global Management, Ares Management, and Golub Capital. These firms collectively oversee more than $1 trillion in assets.

It’s important to note that while funds like Apollo are part of this initiative, they will not directly issue loans through Goldfinch. According to Blake West, Goldfinch’s co-founder, “The loans are managed by funds like Apollo, and Goldfinch Prime investors have exposure to the loans through those funds.”

Investment Structure

The Goldfinch Prime pool operates as a continuous offering where users can invest at any time. Investors deposit USDC stablecoin and receive GPRIME pool tokens, representing their share in the pool. The pool aims for returns between 9% and 12% after fees, with no minimum investment requirement.

Through this offering, Goldfinch seeks to broaden on-chain access to private credit, which constitutes over 60% of all tokenized RWA (real-world asset) assets. As noted by RWA.xyz, there are currently over $11 billion in on-chain private credit. Investment firm VanEck predicts that the tokenized RWA market will exceed $50 billion this year.

Mike Sall, co-founder of Goldfinch, mentioned, “By providing access to trusted private credit managers on-chain, along with stringent compliance standards, we can enhance the quality of private credit investing options worldwide.”

Management and Operations

The Goldfinch Foundation has created an entity that serves as the counterparty to investors, facilitating real-world transactions such as fund share purchases and redemptions. Additionally, Heron Finance, a private credit robo-advisor co-founded by West and Sall, will manage the Prime pool. Heron Finance is tasked with identifying and vetting private credit fund managers that satisfy Goldfinch’s criteria.

However, it’s crucial to understand that Heron Finance does not engage in loan underwriting or risk management; this responsibility rests with the fund managers. West clarified, “The actual underwriting and risk management of loans are handled by the fund managers themselves.”

Handling Default Risks

Fund managers like Apollo will also manage borrower defaults. They will work directly with borrowers to rectify impaired loans and ensure repayments. West explained, “Any losses with individual borrowers are baked into the yields these funds provide, and the robust historical yields for these funds account for losses.”

Eligibility Criteria

All private credit funds in the Goldfinch Prime pool must meet stringent eligibility criteria:
– At least $1 billion in assets under management.
– Over 10 years of experience in private credit.
– Portfolios that contain over 90% senior secured loans.
– Less than 5% payment-in-kind interest income.
– A target non-accrual loan rate below 1%.
– SEC registration with solid quarterly reporting.

Market Performance

As of now, Goldfinch’s native token, GFI, has a market capitalization of $110.7 million, trading at $1.20. This is a decline of 7.5% in the past 24 hours and significantly lower than its all-time high of $32.94 reached three years ago.