A token loan worth $20 million has soured in a lending pool on decentralized lending platform Goldfinch after borrower Stratos’ bets on a real estate technology company and investments in digital assets “have not performed as expected,” pool manager Warbler Labs said in a statement Saturday. forum post about protocol management.
The distressed pool made one four-year loan worth $20 million (USDC) stablecoins with an annual interest of 11% to fintech credit fund Stratos in February 2022. Warbler Labs was the underwriter.
Now about $7 million of the money is at risk of being lost. Warbler revealed.
Stratos allocated $5 million of the money to REZI, a real estate technology company focused on apartment rentals in major US cities, which has now stopped making payments and is expected to write down the position to zero. message said.
Another $2 million of the money – dedicated to something it called POKT – was allocated to “digital asset investments.” Warbler Labs said it was “unaware at the time of the investment,” according to the post. Stratos sold this position at “nearly a complete loss” and added loan collateral to cover the shortfall.
Warbler Labs said it will absorb any losses for investors in the pool.
“This is disappointing and unexpected, to say the least,” Warbler co-founders Michael Sall and Blake West wrote in the post. “Warbler Labs will assume the full risk and responsibility of the recovery, and we have decided to absorb the losses related to REZI and POKT, excluding the positions of Warbler and Stratos.”
The remaining $13 million was allocated to Threecolts, an e-commerce marketplace management startup, which is “performing strongly,” the release said.
The soured loan highlights the risks of tokenized real-world assets (RWA) such as private credit, which has become one of the latest trends in a crypto industry hungry for something to get excited about as capital inflows dry up. It also puts a spotlight on the due diligence process conducted on blockchain-based RWA lending protocols, especially after last year’s string of loan defaults to crypto trading firms.
The development followed another Goldfinch pool lending event earlier this year, when African motorcycle taxi finance company Tugende defaulted on a $5 million loan maturing in October. The borrower also breached loan covenants by making intercompany loans to stem the financial troubles of a sister company, Goldfinch. administrative post said.
“This is the second time there has been a lack of transparency by a borrower or a lack of audit capacity at Goldfinch,” pseudonym user Wiz said on the newspaper’s website on Saturday. the platform’s governance forum. “We can all appreciate that Warbler Labs will absorb the loss, but it is increasingly concerning to discover a complete lack of control from the lender, especially in the context of Stratos as an equity investor in Goldfinch.”
“There is reputational risk,” another user named mans9841 commented under the forum post. “The RWA story is just beginning and we cannot let ourselves down after building so much.”