Active investing — when done right — can turn around a protocol, unlock new product-market fit, and lay the foundation for institutional adoption.
When we first engaged with Pareto (then known as Idle Finance), we saw a protocol with a talented team, a pioneering track record in DeFi credit, and a strong foundation built on real traction and an engaged community. It was clear there was an opportunity to help scale this momentum even further. Through the RockawayX Credit Fund, we partnered closely with the team — bringing in our credit expertise to refine the model, strengthen incentive alignment, and support the evolution of a next-generation credit platform.
The result is a revitalized credit platform now hosting one of the first institutional-grade Structured Credit Facilities (SCFs) on-chain (backed by FalconX) and designed for the future of digital asset lending.
Where Our Relationship Started
When the RockawayX Credit Fund first got involved, Pareto was providing liquidity to other protocols and offering risk tranching for lenders; the Pareto team had successfully built a pipeline of end-user demand.
While supplying significant capital into the DeFi credit ecosystem, an untapped opportunity to capture additional value was recognized.
The core challenge: liquidity was being funneled to a third party that managed loan processing and retained the TVL. As a result, while Pareto owned the end users, it captured no value from them. This was evident in Pareto’s FDV, which remained below $10M, whereas the protocols receiving the supplied capital were consistently valued in the hundreds of millions.
This revealed a clear path forward:
- Incentives could be realigned so that growth directly benefited Pareto, not just its partners
- Regaining ownership of the full product experience would empower Pareto to innovate, differentiate, and better serve its users
- Simplifying the fee structure had the potential to boost LP returns and streamline onboarding
- Tranches had the potential to evolve into a full-fledged product, rather than remain a supporting feature
This was a moment of alignment between RockawayX and Pareto — not just as capital partners, but as strategic collaborators.
Together, we worked to reposition the protocol and lay the foundation for its next stage of growth.
- Rebranded the platform and upgraded the UX
- Brought lending pools in-house, restoring control and transparency
- Significantly enhanced legal protection for lenders, an area often underserved in DeFi
- In collaboration with M11, launched the PBL pool, a new product modeled after RockawayX’s Protocol Business Lending strategy
- Redesigned the business model to prioritize long-term ownership and sustainable growth
- Added new tokens and implemented new incentive programs to attract fresh capital
With the third party removed from the flow, the teams simplified fees and aligned incentives around TVL growth and user experience. A dedicated business development team was also established to support fundraising and partnerships.
The FalconX Credit Vaults: A Milestone for On-Chain Credit
Bringing M11 and FalconX together to build with Pareto, we are proud to have contributed to the launch of the FalconX Structured Credit Facility on Pareto — representing a major milestone for the protocol and on-chain credit markets at large.
To put it in context: the global fixed-income market stands at $140.7 trillion in 2023. Meanwhile, crypto has grown to a $3 trillion asset class, but its credit infrastructure remains underdeveloped. Borrowers often face high costs, limited transparency, and fragmented liquidity.
FalconX, a top-tier digital asset prime broker, is helping change that.
As a result of close cooperation between RockawayX, Pareto, and FalconX, the first fully tokenized institutional Structured Credit Facility (SCF) was successfully launched on-chain.
This is not a proof-of-concept or early-stage pilot — it’s a live credit vault, offering fixed-rate lending opportunities to institutional-grade borrowers through an evergreen, programmable structure. One of the biggest challenges in DeFi has been the absence of uncollateralized or low-collateral credit, especially at institutional scale. The FalconX vault helps bridge that gap: lenders provide capital to professional trading firms, who in turn post collateral with FalconX in order to access leverage.
While the loans are technically uncollateralized from the protocol’s perspective, they are functionally fully collateralized within FalconX’s prime brokerage framework — bringing capital efficiency without compromising on lender protection.
The FalconX vault is designed for performance and protection. It offers fixed-rate loans originated by FalconX to trading firms, hedge funds, and other institutional clients. Each transaction is secured through collateralization and monitored in real time by an on-chain risk engine. To further safeguard lender capital, the vault includes equity tranches that absorb first-loss risk, ensuring a robust and institutionally sound structure.
“As one of the first lenders in the FalconX pool, we closely collaborated with the Pareto team and together dedicated significant effort to structuring the vault in a way that maximizes lender protection. The FalconX vault meets institutional security standards, and while loans are overcollateralized, it maintains capital efficiency. We’re excited about democratizing prime brokerage lending, which was previously available to only a select few lenders.”
— Adam Bilko, Credit Portfolio Manager, RockawayX
This model represents a new frontier — blending the underwriting discipline and security protections of TradFi with the transparency, automation, and global access of DeFi.
“Today’s on-chain credit market is set to evolve beyond the limits of overcollateralized lending, and Pareto is at the forefront of this shift. By streamlining credit and securitization through a fully on-chain, institutional-grade infrastructure, we eliminate legacy bottlenecks — from manual negotiations to opaque lending practices — and offer transparent, seamless financing to everyone from established businesses to DAOs.
In doing so, we tap into the remarkable potential of tokenized assets to enable faster, more efficient capital deployment, ultimately paving the way for a robust digital reputation system that benefits both institutional borrowers and lenders.
This next generation of credit isn’t just about lowering collateral requirements; it’s about creating a more dynamic, globally accessible market that rewards responsible participation and drives meaningful growth for the entire ecosystem.”
- Matteo Pandolfi, Co-founder, Pareto
Moving Forward
Our partnership with Pareto is a powerful example of how DeFi protocols can be restructured to meet the demands of institutional capital. What started as a turnaround story has become a showcase of what’s possible when deep credit expertise meets crypto-native innovation.
Today, Pareto is building momentum. We’ve helped bring notable partners to the table — including FalconX, Bastion, Maven11, and Fasanara — and the protocol’s TVL is on an upswing. In 2023, TVL decreased from a high of $84 million to an eventual low in October 2024 of under $3 million. With our involvement, TVL has risen to $50 million at time of writing (March 25, 2025).
Currently, Pareto has higher value capture, more attractive yields, more lending product diversity for users, greater flexibility, stronger governance, bolstered legal protection, and a cleaner, more compelling comprehensive value proposition for institutional allocators.
For us, this is just the beginning.
As the institutional appetite for on-chain credit continues to grow, RockawayX will continue playing an active role — supporting the infrastructure, partnerships, and capital needed to unlock the next phase.
