Research · · 26 min

How Pareto Studio Works: The Underwriter Sets the Terms, the Credit Facility Deploys Onchain

With Matteo Pandolfi

Key takeaways

  • Matteo Pandolfi says the FalconX credit facility on Pareto is currently the second highest WA collateral on Morpho.

  • Pareto Studio lets underwriters and originators configure and deploy their own on-chain credit facilities in 15 minutes, with Morpho and Pendle add-ons available.

  • Pareto is running internal pilots with fintech companies doing payday loans and is targeting BNPL providers as another core use case.

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Summary

Pareto's CEO says the FalconX facility shows how on-chain credit can follow borrowers' terms, and he names fintech lenders as the next users.

Matteo Pandolfi, co-founder and CEO of Pareto, says the company's FalconX credit facility is "currently the second highest WA collateral" on Morpho. He describes Pareto as a single platform meant to replace fragmented credit workflows and to keep enforcing a facility's agreed rules and covenants on-chain.

From Idle Finance to Pareto

Matteo Pandolfi says the team started in DeFi between 2018 and 2019 as Idle Finance, releasing one of the first aggregators in the space, and rebranded to Pareto a couple of years ago. In his view, early on-chain credit protocols were too strict, forcing borrowers to adapt to the protocols rather than the other way around.

“The early on stream credit protocols were too strict to to the borrowers in the sense that the borrowers needed to adapt to the protocols in order to run credit facilities on chain, and not the not not vice versa, not the opposite.”
Matteo Pandolfi

Facilities in minutes

Pareto Studio gives underwriters and institutional originators an environment to configure and deploy their own credit facilities. According to the description, an originator needs only clear terms with the borrower and an underwriting framework to set one up. Facilities can be deployed with a Morpho adapter or a Pendle fixed rate market attached.

The FalconX facility is underwritten by an outside credit underwriter and provides funding to the loan book FalconX runs as a prime broker.

Fintech as the next borrower

Matteo Pandolfi sees credit as the natural next step once companies such as fintechs are using stablecoins. Pareto is running internal pilots with fintech companies that offer payday loans, and he says BNPL providers fit Pareto Studio well, especially for revolving facilities.

A more specialized DeFi

Over the six, seven years he has watched DeFi, Matteo Pandolfi says it has become more sectoralized, with teams focusing on credit, perps, options or tokenized equity. He likes tokenized shares because they let him run his whole portfolio on-chain. He expects restaking to fade, saying it "will die over time."

Matteo Pandolfi presents Pareto as an answer to protocols that made borrowers fit their rules. He points to the FalconX facility's position on Morpho as early evidence and names fintech lenders as the next group of users.

Pareto, Maybe Labs, FalconX, and Morpho come up most.

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