Undercollateralized Lending Landscape

Introduction

Undercollateralised lending refers to unsecured or sub-100% collateral credit that is both originated and administered onchain, where the lender’s main protection is not automated liquidation but some mix of borrower underwriting, reserve design, monitoring, and legal enforceability. This excludes the majority of current DeFi lending TVL, which sits in overcollateralised money markets like Aave and Morpho that are really liquidation engines (or liquidation engine frameworks) rather than credit venues.

Wildcat and 3Jane solve the same problem in meaningfully different ways. Wildcat is borrower-specific infrastructure, mostly used by market makers. A named borrower defines a single market with its own rate, reserve ratio, withdrawal cycle and legal documentation, and lenders fund that one borrower directly. 3Jane is the opposite. It pools depositors into a Morpho Blue money market, originates 0% collateral lines to a defined merchant cohort, underwrites them through an off-chain credit-scoring engine called 3CA, takes a UCC-perfected security interest via a merchant cash advance structure, and routes defaults through protocol-run collections and auction. In essence, lending into Wildcat means taking exposure to one borrower. Lending into 3Jane means taking exposure to a borrower pool, an underwriting algorithm, and a servicing stack.

Undercollateralised lending is still in its infancy. Wildcat has roughly $10.0 million TVL (available liquidity, calculated as deposits minus active loans) and $198.8 million active loans, versus 3Jane at roughly $4.9 million TVL and $6.7 million active loans. Comparatively, Aave sits at roughly 15.6B in TVL, with 11.6B in active loans.