Plume has launched FACTOR, a tokenized yield-generating vault designed to give qualified on-chain investors access to institutional private credit through net working capital financing, invoice factoring, and other short-duration assets.
The new vault was launched in partnership with Tradable and Deep Ocean Partners, combining Plume’s on-chain vault infrastructure with Tradable’s tokenization technology and Deep Ocean Partners’ private credit expertise.
FACTOR launched with $15 million in committed capital, while investor demand exceeded the initial allocation before launch. The vault is currently capped, with the three firms planning to expand capacity as additional credit opportunities become available.
The launch adds another use case to the growing real-world asset (RWA) sector, as blockchain platforms increasingly bring private credit and other real-economy assets to on-chain markets.
FACTOR Targets Net Working Capital Financing
The core emphasis of FACTOR is Net Working Capital (NWC) Financing, which enables companies to raise funds based on their short-term receivables and assets. The starting portfolio will consist of asset-based lending, receivables finance, and infrastructure deals.
The materials provided by Plume for FACTOR include exposure to invoice factoring, receivables financing, and auto floor-plan financing. The strategy is focused on investments with short durations because the returns will be recurring as obligations are repaid.
This model can be easily illustrated by invoice factoring. The company receives financing against its invoice without having to wait until the payment comes from its debtor. Once the invoice gets paid, the funds can be reallocated into other financial deals.
This enables FACTOR to concentrate its efforts on investing in assets that have a predetermined cycle of payment rather than only having a long-term exposure to private credit positions.
The present-day Plume’s FACTOR products have a targeted 14%+ APY and weekly liquidity. The APY is a targeted figure and not guaranteed, and the private credit positions still have their risks.
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How Plume, Tradable, and Deep Ocean Partners Work Together
There is a clearly defined role assigned to each of the three firms within the FACTOR architecture. Plume offers the vault framework and acts as a curator. It analyzes the opportunities available through Tradable and decides how the investment portfolio should be allocated.
Tradable provides the infrastructure for tokenization and marketplaces. Its platform provides on-chain record-keeping capabilities, investment, distribution, servicing, and lifecycle management. Infrastructure for liquidity and repurchase processes is provided as well.
Deep Ocean Partners provides the private credit management function. It is responsible for originating, underwriting, and servicing the underlying financing opportunities. This company uses both qualitative credit analysis and quantitative analysis combined with ongoing monitoring.
It engages in financing senior secured facilities of term loans, revolver facilities, delayed draw facilities, factoring, trade finance, and bespoke facilities.
According to Alex Cordover, CEO of Tradable, traditional lenders have depended upon limited distribution channels to reach out to institutional capital. This partnership has now opened up another channel through which these lenders can reach on-chain capital without needing to create a blockchain ecosystem of their own.
The structure therefore connects credit origination, asset tokenization and on-chain distribution within a single investment framework.
Tokenization Brings Private Credit On-Chain
FACTOR emphasizes the potential of blockchain to transform the way private credit is distributed and administered.
Private financing has usually been obtained through institutional pools of money, lending facilities, and other dedicated financial entities. Such systems might create problems in making it available for investors in general.
FACTOR will move the process of holding ownership and investment to the blockchain system. It might create a common standard for keeping positions, distributions, and other aspects of the asset’s life cycle.
However, tokenization doesn’t address the inherent risks of private credit. The performance of the borrower, the nature of collateral, and when repayment will take place are key considerations.
Alex Urdea, founder and managing partner of Deep Ocean Partners, said that his firm’s approach to underwriting continues to be based on credit fundamentals using quantitative methods and continuous surveillance.
Furthermore, he highlighted that tokenization does not replace the underwriting process but modifies the participants eligible to take advantage of the credit options.
Likewise, Ryan Wen, Head of Strategy and Operations of Plume, explained that FACTOR is the new way of onboarding NWC financing on the blockchain through direct collaborations with organizations that source, structure, and oversee the lending transactions.
FACTOR Uses Multiple Liquidity Mechanisms
Liquidity will be a factor for any private credit investment. FACTOR has built into itself processes that ensure investor liquidity while still being able to remain exposed to short-term finance investments.
This feature ensures that Deep Ocean Partners can buy back vaulted positions via a warehouse facility where liquidity is required. The design of this process also takes advantage of amortization of receivables.
According to Plume’s product literature, a more holistic liquidity structure consists of a liquidity sleeve, repayment of short-term assets, and contractual buybacks through the warehouse structure.
This is a way of ensuring that the liquidity profile of the vault is consistent with the assets being financed. With time as receivables come into maturity, money can be generated for liquidity purposes.
Plume Expands Its RWA Strategy
FACTOR is one of the many initiatives being undertaken by Plume as they work to introduce institutional physical assets into the blockchain financial markets.
However, the vault goes above and beyond conventional tokenized asset classes through its attention to private credit and working capital finance. Through such efforts, on-chain investors may gain access to financing activities related to the real economy.
Tokenization offers the opportunity for private credit managers to have another distribution channel available, along with blockchain-based infrastructure to track ownership and investments.
The first funding amount of $15 million provides FACTOR with a starting point, but it has great potential to grow even further, provided there is more financing capacity available.
All three businesses have indicated their willingness to grow FACTOR as demand increases. Should it work out well, the system will become an additional important sector within the growing world of RWAs.
FACTOR essentially bridges institutional lending with tokenized ownership and on-chain capital, forming a completely new way of bringing private financing deals into the world of blockchains.
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