A Deep Dive into PACT’s Valuation and Market Potential
PACT, a cornerstone investment in Verda Ventures Series 1, is redefining private credit through on-chain innovation. This valuation analysis explores the two primary drivers of value accrual for PACT: (1) Loan Origination and (2) Securitization & Secondary Markets—both crucial to its long-term growth and market impact.
Market Opportunity: A Massive Untapped Potential
The private credit market is valued at $1.7 trillion, growing at 16% annually (source) over the last decade. While currently, only ~$17 billion (less than 1%) of private credit is on-chain, this segment is expanding at 100%+ annually (source). PACT is already a major player, ranked fourth globally, with over $1 billion in originated on-chain loans (source).
Beyond private credit, the broader global bond market exceeds $100 trillion, with total global debt surpassing $300 trillion. The shift towards tokenized financial instruments signals a monumental opportunity, positioning PACT as a pivotal force in digital credit markets.
Current Pain Points in Traditional Private Credit
Emerging market lenders face substantial hurdles, burdened by intermediaries, antiquated systems, and legal complexities:
- High borrowing costs (15-25%+ annually) due to counterparty risk and servicing inefficiencies
- Securitization costs in emerging markets that are 5x higher than in developed markets (source) of 0.50%-1.50%
- Fragmented and inefficient secondary markets, limiting liquidity and access to capital
PACT solves these inefficiencies through on-chain automation, eliminating unnecessary intermediaries and unlocking cost-effective, transparent, and scalable credit markets.
How PACT Transforms Private Credit
PACT’s proprietary infrastructure delivers a frictionless lending ecosystem, driving efficiency in four key ways:
- Lower Borrowing Costs: Expands investor participation, reducing interest rates
- Eliminates Middlemen: Replaces investment banks, trustees, and verification agents
- Automated Servicing: Reduces manual loan servicing costs and reporting inefficiencies
- Access to New Capital Sources: Attracts stablecoin treasuries and digital asset managers
PACT’s Cost Advantage: Loan Origination & Securitization Savings
While PACT fees are subject to change based on PACT’s tokenomics and governance proposals, 0.25% for loan originations is the indicative value presented in PACT’s tokenomics (source) and will be used for an assessment of the Unit Economics below assuming a notional value of $10m in debt capital over a 1 year (annualized) period. For other cost line items related to origination, we consulted the PACT team and people working at leading web2 lending platforms.
Origination Unit Economics:
| Expense Category | Traditional Cost | PACT Cost | Savings (%) | Why It’s Cheaper |
| Borrowing Cost | 25% ($2,500,000 annually) | 15% ($1,500,000 annually) | 40% | Direct capital market access via tokenization |
| Loan Servicing Costs | ||||
| Payment Processing & Treasury | $50,000 | $25,000 | 50% | PACT automates cash reconciliation & ACH payments |
| Loan Collections & Charge-Offs | $300,000 | $200,000 | 33% | On-chain monitoring reduces manual interventions |
| Investor Reporting & Compliance | $60,000 | $20,000 | 67% | Automated investor dashboards replace manual report creation |
| Manual Reconciliation & Data Management | $30,000 | $15,000 | 50% | Smart contracts automate transaction tracking & reporting |
| Staffing for Loan Servicing (Ops Team) | $50,000 | $25,000 | 50% | Reduces need for full in-house ops team |
| Origination Fee (PACT Protocol) | – | 0.25% ($25,000) | – | On-chain loan issuance fee |
| Total Borrowing + Loan Servicing Costs | $2,990,000 | $1,810,000 | 39% | $1,180,000 saved |
Sources: Management Estimates (PACT Cost), IFC, FMI, Science Direct
Securitization Unit Economics and Savings Table
| Expense Category | Traditional Cost | PACT Cost | Savings (%) | Why It’s Cheaper |
| Securitization Costs | ||||
| Legal Fees | $20,000 | – | 100% | PACT removes the need for IBs in securitization |
| Trustee & Paying Agent | $100,000 | – | 100% | On-chain smart contracts replace third-party trustee |
| Loan Verification | $50,000 | – | 100% | Integrated on-chain loan validation |
| PACT Securitization Fee | – | 0.50% ($50,000) | – | Blockchain-based securitization significantly reduces costs |
| Total Securitization Costs | $170,000 | $50,000 | 71% | $120,000 saved |
Sources: IMF, Management Estimates (PACT Cost)
The Secondary Market Effect: Unlocking a $119 Billion Opportunity
Currently, private credit lacks efficient secondary markets, relying on slow, fragmented OTC transactions. Just as ride-sharing expanded the taxi market, on-chain secondary markets could significantly increase the private credit market’s size (source).
Similarly to how the ride-share market is significantly larger than the taxi market it disrupted, onchain secondary markets could significantly expand the private credit market. If 7% of the $1.7T private credit market becomes on-chain, it represents a $119 billion opportunity. PACT’s role in enabling secondary trading could further grow its total addressable market, creating a powerful go-to-market strategy.
Below, we apply several frameworks to estimate the potential valuation PACT could ultimately achieve, including looking at FinTech earnings multipliers, discounted cash flows and a comparative analysis assessing average valuation/active loans ratio. While this is not an exhaustive list of evaluation methods, we believe there is sufficient data to support the use of the following approaches.
PACT’s Valuation Potential: $3.4B – $22.3B in 7 Years?
1. The Earnings Multiplier Method
As mentioned previously, if 7% of the current $1.7T private credit market opportunity is accessible, this translates to a $119 billion opportunity. Assuming an average loan duration of 2-3 months (typical) with 0.25% per origination and securitization fees of 0.50% (conservative given there could be additional secondary market place fees), this represents an opportunity of $1.78B ($119B * (0.25%*4 + 0.50%)).
As of February 2025, the average EV/Revenue multiple across fintech is 12.5x (source), suggesting a terminal valuation of ~$22B in a bull case at the end of 7 years. If we take a more conservative view that the private credit market does not continue to grow at 10%+ per year and PACT is only able to address 2% of the broader opportunity through originations and tokenization of secondary markets while only being able to turn over the debt capital 2x/years, the earnings opportunity is $340M ($34B * (0.25%*2 +0.50%)), which, at a 10x multiple, would still be $3.4 billion at the end of 7 years.
2. Discounted Cash Flow (DCF) Model
We’ve developed a basic DCF model that incorporates fundamental assumptions regarding PACT’s expected cash flows and growth rates. The model assumes that PACT can increase its origination volume to $5B in 2025 (management projects up to $10B in 2025) and sustain a minimum 25% YoY growth rate (which we believe is realistic given the 100%+ YoY growth and overall market growth), maintain business margins of approximately 60%, applies a 12% discount rate, reflecting the current WACC for early-stage FinTechs (source), and a 5% perpetual growth rate. Under these assumptions, the discounted valuation of PACT is approximately $793 million, with a future terminal value projected to be closer to $1.3 billion, as illustrated below.
3. Comparable Analysis
We utilize two approaches for our comparables analysis: one focusing on privately traded companies and the other on credit protocols with liquid tokens trading in secondary markets. This allows us to assess key metrics such as active loans and the fully diluted valuations (FDVs) of other protocols’ liquid tokens.
By applying the average valuation to active loans multiple of 1.3x to PACT’s $214M in originated loans, we derive an implied current valuation of approximately $277M. However, this metric does not fully capture the exponential growth potential driven by PACT’s robust origination pipeline. Should PACT expand its pipeline by a conservative 5x—as we believe is reasonable given the management team’s forecast of up to $10B in loan originations by 2025—PACT could grow its active loan book to $1B in 2025. The implied current valuation could then rise significantly to over $1.4B ($277M x 5x growth). Additionally, unlike existing companies with liquid tokens and limited track records in traditional lending best practices, PACT’s association with top-tier lenders such as Branch—boasting a 10+ year history of best-in-class risk management and underwriting procedures—along with partnerships with other specialized lending FinTechs, underscores its competitive edge and further supports its premium valuation
Source: https://app.rwa.xyz/private_credit
Additionally, we include Figure in this analysis, recognizing its status as a market leader, ranked first, and a relevant comparable on-chain private credit company in developed markets. In December 2019, when Figure was at a similar high-growth phase to where PACT is now, Figure had originated $700 million in loans and raised $103 million at a $1.2 billion valuation (source), implying a 1.7x valuation to loans ratio. Applying this comparative multiple to PACT’s $1.04 billion in originated loans suggests a potential valuation of approximately $1.78 billion. Whereas Figure has focused on developed markets like the United States, Lucid is more focused on emerging markets, where, we believe, the frictions and cost savings from Lucid’s tech stack are even higher
Conclusion: The Future of Private Credit is On-Chain
PACT is at the forefront of the on-chain private credit revolution, driving efficiency, transparency, and cost savings. By eliminating intermediaries, expanding secondary market access, and offering lower borrowing costs, PACT is set to reshape the $1.7 trillion private credit industry.
Our valuation analysis indicates that, even under conservative estimates, PACT’s potential valuation ranges from $793M to $1.78B today, with a long-term upside between $3.4B (bear case) and $22.3B (bull case) over the next 7 years.
With institutional adoption of on-chain financial instruments accelerating, PACT is strategically positioned for massive growth and long-term value creation.
Disclaimer: Valuations are, by nature, speculative and the above should not be construed as investment advice.