Crypto yield premium vanishes as SME funding gap widens
After Fed rate hikes in 2022, low-risk DeFi yields fell below Treasury yields, removing the incentive for onchain capital. Meanwhile, SME lending in the EU dropped 12% in 2023, creating a €39B annual funding gap.
By the end of 2022, seven Fed rate hikes pushed 10-year Treasury yields to about 3.9%, surpassing low-risk DeFi yields of roughly 2.4%. The yield premium for onchain capital had evaporated.
At the same time, EU SME lending contracted 12% in 2023, leaving an annual funding gap of €39 billion. Between 2017 and 2023, unmet financing needs exceeded €211 billion, and by 2024, 7.6% of SMEs were financially constrained.
This confluence of yield-seeking onchain capital and credit-starved SMEs creates a natural fit for RWA private credit. A Cointelegraph Research report in collaboration with 8lends examines how tokenized private credit can connect these two worlds.
Source: Cointelegraph