Can Private Credit Actually Work Onchain? Cap Founder Explains What It Fixes

For better or for worse, private credit has become one of the hottest trades in finance.

Firms like Apollo and Ares have amassed hundreds of billions of dollars by lending directly to companies and offering investors yields that often exceed what they can earn in public markets, though that may come with more complicated redemptions and risks.

At the same time, crypto has embraced tokenization as its latest obsession, with asset managers racing to put everything from Treasury bills to private funds on blockchain rails. But according to Cap founder Benjamin Sarquis Peillard, most of what the industry calls "onchain private credit" isn't actually changing anything.

"We did not build a blockchain so that Apollo could tokenize their private credit fund," Sarquis Peillard told Coinage in a new interview. "Okay, great. I can buy the private credit fund. I still need to KYC in the same way. So really what does it do?"

That critique sits at the center of Cap, a project attempting something more ambitious than simply issuing blockchain representations of existing financial products. Instead, Cap is trying to rebuild the mechanics of private credit itself using smart contracts.

Traditional private credit funds operate through teams of investment professionals who decide which companies receive loans. Investors hand over capital, fund managers allocate it, and borrowers repay the loans. The process has produced enormous businesses, but it also concentrates decision-making power in relatively small groups.

"Apollo, they're a group of people," Sarquis Peillard said. "They take your money and then those people will go and allocate capital to thousands of companies. But it's maybe 30 or 40 people that are deciding on these loans."

Cap's answer is to replace part of that structure with a marketplace.

The platform introduces a new participant it calls an underwriter. Instead of fund managers deciding who receives credit, underwriters post collateral and vouch for borrowers. If the borrower performs, the underwriter earns a portion of the credit spread. If the borrower defaults, the underwriter's collateral can be seized.

"The people that make decisions over allocating capital at Cap are tied directly to the loss," Sarquis Peillard said. "If you know you're going to lose money if you make a bad decision, you're going to take a little bit more time looking at your decision."

The model draws heavily from crypto's native strengths. Cap is built around the Ethereum ecosystem and leverages restaking infrastructure such as EigenLayer and Symbiotic, allowing collateral providers to effectively insure loans. Instead of trusting a centralized credit committee, the system attempts to align incentives through crypto-economic guarantees.

The broader goal is to solve a problem that has long plagued crypto lending: Where does the yield actually come from?

For years, much of decentralized finance has revolved around lending against crypto assets themselves. Bitcoin holders borrow dollars without selling their Bitcoin. Traders loop stablecoins through lending protocols to amplify returns. New tokens distribute incentives that create yield temporarily but often disappear when emissions end.

Sarquis Peillard argues that much of this activity ultimately traces back to crypto speculation.

"Where's the end of the string?" he asked. "If you pull it enough, it's always Bitcoin. It's Bitcoin bank lending. It's speculation. It's basis trading." For Cap, the answer is connecting crypto capital to real-world borrowers.

"The only way to get away from that is connecting to the real economy," Sarquis Peillard said. "Can the manufacturing plant in Boston borrow from me? Can the farmer in Wisconsin borrow from me?"

That vision reflects a broader shift taking place across crypto.

The last cycle was dominated by experiments in purely crypto-native financial engineering. Today's institutional push is increasingly focused on bringing real-world assets and real-world cash flows onchain. Asset managers including Franklin Templeton, WisdomTree, Flow Traders, and Susquehanna have all become involved with Cap, another sign that some of the largest financial players are beginning to view blockchain infrastructure as more than a speculative experiment.

Yet, Sarquis Peillard remains skeptical of projects that merely tokenize existing products. What excites him isn't moving private credit funds onto a blockchain. It's replacing parts of the private credit system entirely.

"I think fundamentally we're shifting how people view financial products," he said. "They don't have to be these clunky human systems."

Cap is building its system around a new token of its own and launching via a Uniswap auction. This week the CAP token sale for some of the earliest investors was oversubscribed and sold out.

Whether Cap can deliver on its vision to take on the traditional private credit machine will take time. But even if it doesn't to the point of flipping the Apollo's of the world, and the more than $700 billion they manage, Sarquis Peillard says there is plenty of room to run.

"They have many advantages if we're talking about Apollo. I mean, we're nowhere near competing with them, " he said. "But I think fundamentally we're shifting how people view financial products ... eventually, once we have more traction, hopefully when there's more regulations, we will replace them because this should be the future of finance."

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