Private credit marketplace Pareto introduces a new synthetic dollar aimed at linking institutional investors with decentralized finance (DeFi) opportunities — a move that highlights the expanding role of stablecoins in global finance.

Private credit marketplace Pareto has introduced a new synthetic dollar aimed at linking institutional investors with decentralized finance (DeFi) opportunities — a move that highlights the expanding role of stablecoins in global finance.

Private credit marketplace Pareto has launched a synthetic dollar designed to link institutional investors with decentralized finance (DeFi) opportunities, highlighting the expanding role of stablecoins in global finance.

The newly launched USP synthetic dollar is fully backed by real-world private credit, Pareto told Cointelegraph on Monday. To mint USP, users must deposit stablecoins such as USDC USDCUSD and USDt USDTUSD, which are then held as collateral.

“USP is backed 1:1 by the stablecoins used during the minting process,” Pareto co-founder Matteo Pandolfi said in a written statement.

The deposited funds are placed into Pareto’s credit vaults and lent to what the company describes as “vetted institutional borrowers,” generating yields for participants.

To maintain its peg to the US dollar, Pareto uses what it calls a “native backing” process. Each USP token is minted only when an equivalent amount of USDC or USDT is deposited, ensuring full collateralization when the token is created. An arbitrage mechanism also supports the dollar peg’s ongoing stability.

In addition, Pareto has set up a protocol-funded stability reserve to act as a buffer in case of borrower defaults.

The company said the synthetic dollar gives institutional investors a regulated onchain entry point into real-world asset (RWA) credit markets — a segment of the tokenization industry that has expanded rapidly over the past year.

Recent examples of private credit tokenization include Tradable’s portfolio of 30 credit positions and Apollo’s Diversified Credit Securitize Fund.

When asked about the potential risks of connecting DeFi to the often opaque private credit sector, Pareto acknowledged the concern but emphasized its approach to risk management.

“That’s a