Valinor's path to institutional lending in the digital economy - S3E6

So for the people listening, I think that some of the terms that you mentioned they have heard about.

Mm-hmm.

But they don't necessarily know what they mean or how a practitioner would actually use them, and the two in particular that have come up are private credit, so it would be helpful to get a definition of that.

And then Valnor is trying to help bring private credit on-chain.

It would be helpful to know what does on-chain even mean, and what does it mean for private credit to move on-chain?

Sure.

So private credit, I think the simplest definition is non-bank lending.

So historically, especially prior to a few decades ago, lending was largely done through the banks, depository institutions, and then over the past few decades, you've seen a growth in non-bank lenders that are typically set up as funds.

So Blackstone, Apollo, KKR are well-known asset managers that play in this space, where they aggregate capital from, um, investors as opposed to depositors, and then make loans out of those fund vehicles.

And so all t- all to say, private credit, fancy name for non-bank lending at the, at the simplest definition of it.

And for the people who are listening, uh, if we were to, like, situate it, basically some years ago, banks used to make these loans for a variety of reason, regulation.

They can't make those loans.

Something had to fill the space, and places like Valnor are now filling the space, and that's what we refer to when we say private credit.

Yes, and I think the real, to the point you're making, I think the real...

It's a story of market expansion as much as it's a story of bank retrenchment.

You're seeing that businesses that maybe wouldn't fit the, the typical mold for bank lending could access financing that worked for their businesses by going to a private credit lender.

And where, to the second part of your earlier question, why this market coming on-chain we think is valuable and exciting, is that it continues to expand the market further because it makes credit for borrowers and managers and investors even more accessible.

Because blockchain is the e- great equalizer for financial services is kind of how we think about it.

It's so much easier and cheaper to transact that a lot more people can participate, and that means that the credit markets themselves can expand with even more non-bank lenders than participated in the, let's call it traditional private credit markets.