Asia, Credits, Web3, Cointelegraph Accelerator

Access to investment opportunities has long been shaped by invisible lines — those who qualify for exclusive financial products and those who do not. While blockchain has lowered many barriers in global finance, the reality is that some of the most attractive opportunities remain siloed within traditional systems, far out of reach for everyday investors.

One project working to address this challenge is Mu Digital, a platform founded by former investment bankers who saw firsthand how yield products in Asia were reserved for institutions and ultra-wealthy investors. Backed by the Cointelegraph Accelerator program, the company is building infrastructure to bring Asia’s credit markets onchain — making them available in permissionless, composable formats for DeFi users worldwide.

In this interview, Patrick Hizon, co-founder and CEO of Mu Digital, talks about the problem of limited access to Asia’s credit opportunities, the company’s strategy for packaging real-world assets into DeFi-ready products and the role Cointelegraph Accelerator plays in scaling adoption.

Asia, Credits, Web3, Cointelegraph Accelerator
Source: Mu Digital

Cointelegraph: What inspired Mu Digital’s mission, and how do you define the problem you’re setting out to solve?

Patrick Hizon: Mu Digital was born out of a fundamental frustration: the best investment opportunities in Asia are invisible to the everyday investor. Both co-founders built investment banking careers covering the region. Our survival depended on our ability to continually find new deals.

We observed firsthand how corporate-backed yield products were consistently reserved for a small circle of financial institutions and ultra-high-net-worth individuals. The rules of the “old world” financial system were designed to gatekeep access.

We founded Mu Digital to bring Asia’s best risk-adjusted yields onchain and make them accessible to anyone with a Web3 wallet. Yet, providing an attractive solution for Web3 users requires professionals who know how to source, diligence and underwrite deals. Further, to unlock the true power of blockchain technology, the investments need to be delivered in a permissionless, composable format that any DeFi user can access.

CT: How do you see the evolution of digital assets onchain, and why does this moment feel right for bringing real-world credit onchain?

PH: The financial system is at the cusp of a paradigm shift. Governments, regulators, financial institutions, builders and users across the globe recognize the power of finance on blockchain rails. While the pace of adoption will run at different speeds across the globe, the flow of capital onchain is inevitable.

A McKinsey study projected $400 billion of stablecoin value by 2025 and $2 trillion by 2028. Where do the funds look to be utilized? Outside of trading, payments and cross-border remittances, this liquidity will desire credible yield alternatives.

There has been a lot of interesting innovation in DeFi, but there are not enough onchain primitives to sustain this explosion of capital. The entire DeFi market size today is $155 billion. We believe the $20 trillion APAC credit market will play a massive role in providing a sustainable and scalable home for the stablecoin explosion already underway.

CT: Within the $20 trillion APAC credit universe, which segments are you targeting first, and what typical tenors, collateral and risk profiles should investors expect?

PH: Our strength is our ability to canvass the entirety of Asia — it’s where we cut our teeth as investment banking executives. We want to bring the entire credit risk curve onchain: sovereign debt, corporate debt (from investment grade to high yield), to private credit deals (originated and diligence by investment banks, private equity and credit funds).

The yields underlying our asset inventory can range anywhere from 4 to 20%. DeFi users live across the risk-return spectrum, and we want to bring solutions to cover every flavor.

The more important consideration is how to package these assets into a form that DeFi users desire. Our solution must be highly liquid, composable into DeFi primitives and most importantly, deliver yields that are competitive with other DeFi yield products on the market.

CT: What role do partnerships play in your strategy, and where are you looking to collaborate most deeply?

PH: We see real-world credit onchain as the foundational layer to DeFi. Our product is designed to serve as the base DeFi Lego for other DeFi primitives to be built on top of.

DeFi deserves a better base layer. Sovereign credit in emerging markets such as the Philippines or Indonesia can offer yields at 7-8% today, double that of current US treasury spreads. Yet, the stability of those yields is far superior to crypto-native yield products, which typically experience volatility correlated with broader crypto markets.

Our products will be composable into every category that makes DeFi yield farming fun: yield trading platforms, vaults, money markets, decentralized exchanges and perpetual exchanges. Mu Digital was built for DeFi, and we welcome partnerships with any interesting primitives that are looking for premium yield sources.

CT: How has the Cointelegraph Accelerator shaped your approach and journey so far?

PH: I’d like to give a big shoutout to our Cohort leaders, Paul (the No-BS mentor) and Anthony (Mr. Dip). From the beginning, they have delivered bespoke advice to us, based on our prior experience and where our relative strengths and weaknesses lie.

It’s easy to build in Web3 based on something that “worked in the last cycle”. Paul and Anthony have both seen multiple cycles in Web3 and bring rich backgrounds from Web2, differentiating the Accelerator from others.

Building a venture is building a venture, whether you are in Web2 or Web3, only those who have lived both sides of the coin can devise the best strategies to succeed in a rapidly evolving space.

We look forward to our continued partnership.

CT: In what ways has the Accelerator’s community and platform supported your progress?

PH: Cointelegraph Accelerator has provided more than marketing and public relations support. They’ve been a strategic partner helping us think through a range of issues as we’ve grown as an early-stage project.

What started as primers on product market fit, tokenomics and blockchain security has evolved into regular sessions on our evolving challenges, which only grow the more traction we’ve experienced!

Cointelegraph’s global reach helped us expand our market access outside Asia into the US and Europe. The Accelerator has helped us with pitch competitions, events and business development introductions across the Web3 space.

We’ve had direct feedback on our fundraising pitch decks, website branding and copy and even discussions on how to effectively shoot vlog content to promote our founder profiles!

CT: Which experiences from your previous career most influence how you build and lead at Mu Digital today?

PH: We were both early explorers of DeFi summer in 2021 and have tracked tokenization as a concept since the early ICO days in 2017. A lot of the early experimentation was interesting, but we saw apparent flaws in product construction and asset stability, especially given our backgrounds in traditional finance. Yields are not supposed to be speculative or volatile products.

That being said, we loved playing around onchain. We saw the potential of a decentralized system that can open access to the masses, while innovating on financial products by opening up composability.

We know that an entire risk curve exists offchain, which hasn’t been brought onchain yet. We know this risk curve is difficult to access — even in the investment banking world, the ability to find deals is not equal.

We saw the opportunity to bring our expertise to the onchain economy and bring yields in Asia onchain.

CT: As you move toward launch, what milestones matter most to you, and how will you know you’re on the right track?

PH: As we move toward launch, three milestones matter most to us. First, closing and onboarding our inaugural set of yield deals. These are the proof points that Mu Digital can source, diligence and tokenize credit opportunities in Asia at institutional standards.

Second, building deep liquidity around those products. To date, demand has been the biggest hurdle for all protocols trying to bring offchain assets onchain. Access without liquidity is just another closed market. Third, composability: seeing other DeFi protocols plug into our products as “DeFi Legos” will be a sign that we’re truly part of the ecosystem.

We’ll know we’re on the right track when three things are happening at once: everyday users are earning yields they’ve never had access to before, institutional investors are confident enough in our underwriting to allocate capital onchain and builders across DeFi are treating Mu Digital yields as primitives they can build around. That’s when we’ll know that we’re not just launching a product, but laying the groundwork for a new financial system.

The Cointelegraph Accelerator has opened applications for a unique program in collaboration with Injective. Applications are open until October 17, and the program begins on November 3.

Find out more about Mu Digital

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