Mu Digital: Bringing Asia's $20 trillion credit market on-chain

Author: Cointelegraph

Translation: TechFlow

Mu Digital co-founder and CEO Patrick Hizon discusses why Asia's $20 trillion credit market is crucial for decentralized finance (DeFi), and shares insights on demand for liquidity and composable yield products, as well as key milestones for the platform's launch.

Access to investment opportunities has long been shaped by invisible barriers—the gap between those eligible for exclusive financial products and those who are not. While blockchain has lowered many barriers in global finance, the reality remains that some of the most attractive opportunities are still confined within traditional systems, out of reach for average investors.

Mu Digital is one project aiming to solve this issue. Founded by former investment bankers who witnessed firsthand how Asian yield products were reserved exclusively for institutions and ultra-high-net-worth individuals, with support from the Cointelegraph Accelerator program, Mu Digital is building infrastructure to bring Asia’s credit markets on-chain—offering permissionless, composable access to global DeFi users.

In this interview, Mu Digital co-founder and CEO Patrick Hizon dives deep into the problem of limited access to Asian credit opportunities, the company's strategy for packaging real-world assets into DeFi-compatible products, and the role of the Cointelegraph Accelerator in driving adoption.

Source: Mu Digital

Cointelegraph: What inspired Mu Digital’s mission? How do you define the problem you're trying to solve?

Patrick Hizon: Mu Digital was born out of a fundamental frustration: the best investment opportunities in Asia are invisible to everyday investors. Both co-founders built our careers in investment banking across Asia, where our livelihood depended on constantly uncovering new deal opportunities.

We saw firsthand how corporate-backed yield products were always reserved for a select few financial institutions and ultra-high-net-worth individuals. The rules of this "old world" financial system were designed as gatekeeping mechanisms.

We founded Mu Digital to bring the best risk-adjusted yields from Asia on-chain, making them accessible to anyone with a Web3 wallet. However, delivering compelling solutions for Web3 requires professionals to source, conduct due diligence on, and underwrite deals. Moreover, to truly unlock the potential of blockchain technology, these investments must be delivered in a permissionless, composable format accessible to all DeFi users.

CT: How do you view the evolution of on-chain digital assets? Why is now the right time to bring real-world credit on-chain?

PH: The financial system stands at the edge of a paradigm shift. Governments, regulators, financial institutions, builders, and users worldwide now recognize the power of blockchain-based finance. While adoption speeds vary globally, the flow of capital on-chain is inevitable.

A McKinsey study predicts stablecoin value will reach $400 billion by 2025 and $2 trillion by 2028. Where will this capital go? Beyond trading, payments, and cross-border remittances, this liquidity will require credible yield alternatives.

While DeFi has seen many exciting innovations, there is currently insufficient on-chain infrastructure to support this surge in capital. Today, the entire DeFi market stands at $155 billion. We believe Asia-Pacific’s $20 trillion credit market will play a major role in providing a sustainable and scalable environment for the growth of stablecoins.

CT: Within the $20 trillion Asia-Pacific credit market, which segments are you targeting first? What tenors, collateral types, and risk profiles can investors expect?

PH: Our strength lies in comprehensive coverage across Asia—our home base as investment banking executives. We aim to bring the entire credit risk curve on-chain: from sovereign debt and corporate debt (investment-grade to high-yield bonds) to private credit transactions (sourced, vetted, and underwritten by investment banks, private equity, and credit funds).

The yields on our assets range from 4% to 20%. DeFi users have diverse risk appetites, and we want to offer solutions across the risk-return spectrum.

A more important consideration is how to package these assets into the forms DeFi users need. Our solutions must be highly liquid, composable within DeFi infrastructure, and above all, deliver yields competitive with other DeFi yield products in the market.

CT: What role do partnerships play in your strategy? In which areas are you looking to deepen collaboration?

PH: We see bringing real-world credit on-chain as a foundational layer for DeFi. Our products are designed to serve as the base layer—the foundational DeFi Lego—for others to build upon.

DeFi needs a better base layer. Sovereign credit in emerging markets like the Philippines or Indonesia currently offers 7–8% yields—double the current U.S. Treasury rates. Moreover, these yields are far more stable than crypto-native yield products, which often fluctuate with broader crypto market volatility.

Our products will be composable across all categories that make DeFi yield strategies interesting: yield aggregators, vaults, money markets, decentralized exchanges, and perpetual exchanges. Mu Digital is built for DeFi, and we welcome collaboration with any innovative project seeking quality yield sources.

CT: What role has the Cointelegraph Accelerator played in your strategy and development so far?

PH: I’d like to especially thank our accelerator leads Paul (the No-BS mentor) and Anthony (Mr. Dip). From day one, they provided tailored advice based on our experience, strengths, and weaknesses.

In Web3, it's easy to default to building based on what worked in the last cycle. But Paul and Anthony have lived through multiple Web3 cycles and also bring rich Web2 experience—this sets the Cointelegraph Accelerator apart from others.

Startups are startups, whether in Web2 or Web3, but only those deeply involved in both can craft the best strategies for success in fast-evolving fields.

We look forward to continuing our collaboration with the Cointelegraph Accelerator.

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

PH: The Cointelegraph Accelerator offers more than just marketing and PR support. They act as strategic partners, helping us think through various challenges as we grow as an early-stage project.

Initially, they provided foundational guidance on product-market fit, tokenomics, and blockchain security. As we gained more market traction, this evolved into regular sessions addressing our shifting challenges—which only grow alongside our momentum!

Cointelegraph’s global reach has helped expand our market scope from Asia to the U.S. and Europe. The accelerator has facilitated project pitches, events, and business development outreach within the Web3 space.

We received direct feedback on our fundraising pitch deck, website branding and copywriting, and even discussions on how to effectively shoot vlog content to promote founder visibility!

CT: Which experiences from your previous careers have most influenced how you build and lead Mu Digital today?

PH: We were both early explorers during the 2021 DeFi summer and have followed the concept of tokenization since the early days of ICOs in 2017. While many early experiments were fascinating, we noticed clear shortcomings in product design and asset stability—especially given our traditional finance backgrounds. Yield should not be a speculative or volatile product.

That said, we love exploring on-chain. We saw the potential of decentralized systems to democratize access and innovate financial products through composability.

We knew there was an entire risk curve existing off-chain that had yet to come on-chain. And we also understood that accessing this risk curve is difficult—even in investment banking, the ability to source deals varies greatly.

We saw an opportunity to bring our expertise into the on-chain economy and deliver on-chain yields from Asia.

CT: As you move toward launch, which milestones are most critical? How do you know if you're on the right track?

PH: Three milestones are critical as we approach launch. First, completing and launching our initial yield-generating transactions. These will demonstrate Mu Digital’s ability to source, conduct due diligence on, and tokenize credit opportunities across Asia to institutional standards.

Second, building deep liquidity around these products. So far, demand has been the biggest obstacle for any protocol attempting to bring off-chain assets on-chain. Access without liquidity only perpetuates closed markets. Third, composability: seeing other DeFi protocols integrate our products as “DeFi Legos” will signal true ecosystem integration.

We’ll know we’re on the right track when three things happen simultaneously: everyday users are earning yields they previously couldn’t access; institutional investors are confident enough in our underwriting to allocate capital on-chain; and DeFi builders treat Mu Digital’s yields as foundational building blocks they can build around. At that point, we won’t just be launching a product—we’ll be laying the foundation for a new financial system.

The Cointelegraph Accelerator has partnered with Injective to launch a unique project application. The application deadline is October 17, and the program officially begins on November 3.