Meet the Underwriters Behind Clearpool’s Loans: Cicada Partners

In credit markets, returns are a byproduct of disciplined underwriting and continuous risk control. Before a single dollar of liquidity is deployed on Clearpool, every borrower is assessed on their financial strength, operational soundness, and capacity to manage credit responsibly.

Behind this process stands Cicada Partners, the independent underwriter bringing institutional-grade credit standards to on-chain lending.

Who is Cicada Partners

Cicada Partners is a credit risk advisory and underwriting firm focused on institutional stablecoin financing, tokenized credit markets, and real-world asset (RWA) risk analysis and analytics. Their work spans credit underwriting, portfolio risk management, and market research across DeFi, fintech, and private credit.

Having 50+ years of collective experience in traditional capital markets, as well as deep on-chain experience underwriting over $860m in loans and structuring over $50m in RWA assets, Cicada brings extensive experience to the structuring and management of real yield on-chain.

How Cicada Works With Clearpool

Cicada serves as Clearpool’s independent credit underwriter. Before any borrower goes live, Cicada conducts a complete credit review that includes:

• Financial analysis: liquidity, leverage, cash-flow stability, and a thorough review of the company’s financial position
• Operational review: business model sustainability, exposure to counterparties, and governance
• Qualitative diligence: management quality, reporting discipline, and compliance posture
• Structural analysis and implementation: capital structure, covenants, off-balance sheet obligations, and a pro-forma debt structure.

In practice, Cicada structures and underwrites opportunities, sets covenants and terms appropriate to short-duration, payment-flow-linked credit, and monitors borrower health as loans season.

Inside Cicada’s Methodology: A Conversation

To better understand how Cicada approaches risk, we interviewed co-founder Sefton Kincaid for a detailed discussion on methodology, borrower evaluation, and the evolution of on-chain credit.

Q1. What makes underwriting in DeFi unique compared to traditional finance?

Sefton: Yield and credit on-chain in particular remains very early. Most yield is either derived from basis trading or token inflation, both of which is pro-cyclical and un-sustainable through a full economic/crypto cycle. So underwriting yield in DeFi needs to be taken with far more skepticism and a greater focus on enduring cash generation versus speculation.

Q2. What are the most important metrics you evaluate before approving a borrower?

Sefton: Specific to transaction-based financing, the most important metrics we focus on are (1) transaction margins/unit economics and (2) cash flow. We are structuring short-term revolving facilities that ebb and flow with transaction volumes, and so ensuring sustainable margins for both lenders and borrowers, which enable incrementally strong borrower profitability, is of primary importance to ensuring cash for operations remains in a strong position for the business to focus on growing volumes.

Q3. How do you monitor borrower health once a loan is live?

Sefton: We structure clear reporting covenants that are based on a combination of traditional counterparty risk assessment frameworks and more modern analysis of a borrower’s transactions. The short duration nature of the loans and underlying collateral enable us to recall a loan if borrower health or reporting quality deteriorates.

Q4. How do risk profiles differ between borrower types: trading firms, fintech originators, and PayFi participants?

Sefton: It’s difficult to generalize risk profiles by sector, but our early focus on fintech originators was based on the desire for better recovery/downside protection given direct claim on an underlying asset via a ring-fenced SPV structure, whereas in the event of default with a trading firm one should generally expect an unsecured loan to have a recovery near zero. In terms of PayFi or transaction-based lending, we particularly like this burgeoning vertical given a lien can be taken on a business with product market fit, material equity capital backing, and may or may not be free cash flow positive. With the ability to keep durations short and focus lending on unsettled transactions, we limit the risk of an operator default and support borrower growth within profitable unit economics. So the devil is really in the details across these three common DeFi credit verticals.

Q5. How do you see the role of underwriters evolving as credit moves on-chain?

Sefton: You can’t teach old dogs new tricks. The growth of overcollateralized lending in crypto is just another way of thinking about tranching/risk transfer in traditional markets. For RWA to scale on-chain, it will need tried and true on-chain protocols to integrate these assets, like Mystic Finance is doing with RWAs already, or Pendle could do to build out credit curves, a key missing component in on-chain credit markets.

Q6. You are active in the space since 2020. What are the major learnings when it comes to onchain credit?

Sefton: First, all crypto yield is hyper cyclical, whereas traditional credit runs on a different cycle. Second, we can’t wait around for fully 10% on-chain businesses to proliferate, so we must run parallel legal risk structuring docs for the foreseeable future. While that might seem operationally burdensome, the ability to sit on-chain but structure more traditional, real-yield opportunities gives us a differentiated opportunity to be opportunistic when there are dislocations in on-chain capital vs. traditional capital markets. Given traditional fund limitations and biases within on-chain capital markets, we expect these dislocations to remain for many years to come.

The Institutional Discipline of On-Chain Credit

For liquidity providers, Cicada’s involvement provides confidence that Clearpool’s yields are backed by institutional-level credit analysis and not just high risk premiums. For borrowers, it ensures fair access to capital under transparent, data-driven frameworks.

Cicada’s process bridges the structure of traditional credit underwriting and the transparency of blockchain finance.

What Comes Next for On-Chain Credit

As Clearpool expands into PayFi, its credit infrastructure moves beyond institutional lending to finance real-world stablecoin payments. These short-cycle credits turn over rapidly and depend on constant liquidity and counterparty visibility, requiring rigorous underwriting.

Cicada’s independent credit framework ensures every PayFi facility is grounded in verified borrower data, sound structure, and active monitoring, turning on-chain payment flows into a sustainable institutional-grade credit market.