A new report from Galaxy Digital argues that stablecoins and smart contracts are driving a structural shift in how credit is issued, enforced and repaid on blockchain networks.
In a paper titled “The New Age in Onchain Credit Markets,” Galaxy’s venture team outlines how programmable stablecoin cash flows, combined with onchain data and automated enforcement, are creating a new credit architecture that could challenge parts of the traditional $1.6 trillion private credit market.
Credit markets are being rebuilt onchain.
Stablecoin cash flows, smart contract lockboxes, and programmable enforcement are reshaping asset-backed finance.
Galaxy’s latest Perspective explores the emerging architecture of onchain credit 🧵
— Galaxy (@galaxyhq) February 23, 2026
From overcollateralized DeFi to programmable lending
Early decentralized finance (DeFi) lending models relied heavily on overcollateralization, a structure pioneered by MakerDAO. Attempts at unsecured lending later emerged but faltered during the 2022 credit crisis, when major borrowers such as FTX and Three Arrows Capital collapsed, exposing weak offchain enforcement and opaque underwriting practices.
Galaxy argues a new wave of protocols is addressing those flaws by anchoring repayment directly to verifiable, onchain stablecoin flows. By using smart contract “lockboxes” and deterministic repayment rules, lenders can automatically sweep receivables at the point of settlement, reducing reliance on courts and intermediaries.
The firm points to models blending onchain capital formation with varying degrees of offchain underwriting, including Maple Finance and Figure, as evidence that blockchain rails are already lowering funding friction.
Stablecoins as enforceable collateral
Galaxy highlights fintechs such as Rain, which processes stablecoin-funded card payments, as examples of how programmable cash flows can serve as enforceable collateral. Protocols, including Credit Coop, are building infrastructure that automates repayment directly from receivables.
The report concludes that as transparency and automated enforcement improve, DeFi-native credit markets could become more capital efficient and competitive with traditional private credit, potentially compressing yields while improving risk-adjusted returns.
Meanwhile, the organization exceeded its fundraising goal for its latest fund, highlighting renewed investor interest in the digital asset sector. According to sources familiar with the matter, Galaxy Ventures Fund raised more than its initial target, reflecting optimism for blockchain and crypto startups despite ongoing market volatility.
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