The Curious Case of On-Chain Private Credit Repo

Steakhouse Financial argues that managing risk for off-chain assets such as private credit in DeFi rests mainly on primary liquidity and careful loan-to-value parametrization, which it says helps avoid bad surprises for lenders. Private credit's illiquid, complex and opaque nature has been an awkward fit for crypto buyers who prioritize liquidity and transparency, so issuers are looking to use DeFi composability to offer higher yields. A Morpho repo example shows two parties agreeing on a collateral asset, loan asset, liquidation loan-to-value, oracle and interest rate model.