Solana Is Becoming The Home Of Onchain Credit Origination | Marius Ciubotariu & Reid Simon

Camino was founded roughly three years ago on Solana, initially to tokenize liquidity provider positions before expanding into borrow-lend. Figure has been working at the intersection of traditional finance and on-chain credit origination since 2018, with the goal of rebuilding capital markets on a blockchain. Figure describes itself as vertically integrated across the full stack, from credit origination through cash flow structuring to distribution across both TradFi and DeFi channels, and has tokenized approximately 22 billion dollars worth of home equity lines of credit on chain, primarily on the Provenance blockchain before expanding to Solana roughly nine months ago.

Reid Simon draws a sharp distinction between credit origination and credit intermediation. Private credit funds represent intermediation, where a manager controls when investors can access capital and when marks are updated, reducing transparency and investor control. Figure represents origination, where the lender holds actual ownership and a security interest against a specific asset. Simon argues that HELOCs backed by real American homeowners making real cash flow interest payments are fundamentally different from yield products tied to stablecoin supply and demand dynamics.

Marius Ciubotariu argues that prior to real-world assets entering DeFi, the ecosystem lacked exogenous, sustainable yield and depended on native crypto collateral and token emissions. He identifies Ethena as the first meaningful glimpse of exogenous yield in DeFi, driven by funding fees on centralized exchange positions. RWA deposits on Kamino markets have grown consistently even during difficult periods for crypto, with Solana users showing strong appetite for yields in the range of 11 to 12 percent, which Ciubotariu contrasts with the 2.5 to 3 percent yields typically seen on Aave. He attributes this gap to Solana users having a higher general risk tolerance.

Ciubotariu identifies a transparency problem with tokenized private credit, noting that ordinary users often cannot see the prospectus, underwriting details, or how assets are marked to market, making such products resemble a black box. He argues that tokenization alone does not make an asset good and that DeFi's openness is a structural advantage. He highlights that blockchain-based lien registries can prevent double pledging of collateral, citing the Tri-Color and First Brands incidents as examples of double pledging fraud that exposed major credit funds to losses. Figure's lien registry for HELOC assets makes any pledge visible on chain, technically preventing that category of fraud.

Figure's FORGE platform is designed to solve the core structural challenge of bringing non-fungible loans into DeFi protocols. FORGE takes individual non-fungible loans and outputs standardized one-dollar units of loan participations, making the assets fungible enough to be used as collateral inside DeFi. FORGE acts as an arbitrageur between securitization markets in TradFi and on-chain originators, incentivizing originators to sell into the platform when participation tokens trade above market and connecting them with securitization markets when tokens trade below. Figure's PRIME platform provides liquidity through an hourly reverse Dutch auction borrow-lend mechanism, with one hour chosen as a compromise between the continuous interest rate environment of DeFi and the slower pace of traditional off-chain originators.

Ciubotariu says that virtually all demand in the RWA borrow-lend market currently comes from looping, with an average looping multiple in the primary market of approximately 5.6, meaning for every dollar contributed by loopers roughly five dollars comes from lenders seeking lower but more stable yield. He cautions that instant liquidation assumptions that apply to ETH, Bitcoin, and SOL must be relaxed for real-world assets, and that the appropriate response for assets with thin liquidity or quarterly redemption windows is to adjust pricing, loan-to-value ratios, or liquidation penalties and require users to accept the duration risk explicitly. He also warns that adverse selection risk is significant when deciding which tokenized assets to bring on chain, pointing to Apollo gating withdrawals as an illustration of risks that exist even with highly regarded private lenders.

Ciubotariu frames the long-term goal of DeFi as reducing all non-credit risks to zero through formal verification, long time locks, sound operational security, and reliable oracles, warning that failure to address these risks will push DeFi toward fully permissioned, whitelisted systems that undermine its core appeal. He characterizes leverage looping on RWAs as a stepping stone rather than the final form, arguing the end state is users holding RWAs and using DEX and borrow-lend infrastructure to access liquidity, exit positions, borrow, short, or loop on demand through a 24-7 blockchain-native financial system. Simon describes Figure's ambition as becoming a credit layer for DeFi rather than a single product, with plans to add chains, add credit asset types including auto loans, SMB receivables, and first lien mortgages, and eventually bring tokenized equity on chain.