How to Diversify Investments on 8lends
One borrower defaults with all your capital in a single project? That's a -50% hit. The same money split across 20 projects turns disaster into a -2.5% footnote.
Diversification on 8lends means distributing capital across several projects so that the default of a single borrower does not significantly affect the portfolio. A minimum of 100 USDC per project makes diversification accessible even with a small amount of capital. Effective diversification on 8lends works along four axes: number of projects, credit ratings, loan terms, and type of protection (Buyback vs standard RWA projects). The goal is to turn a single default into a manageable event rather than a catastrophe.
Why Diversification Is Critical
In P2B lending, credit risk falls directly on the investor. If all capital is in one project and the borrower defaults, potential losses are at their maximum. When spread across 10–20 projects, a loss on one is 5–10% of the portfolio, not 100%.
Simple math:
- 1 project for 10,000 USDC, default with 50% recovery: -5,000 USDC losses (-50% of portfolio)
- 10 projects of 1,000 USDC each, default of one with 50% recovery: -500 USDC losses (-5% of portfolio)
- 20 projects of 500 USDC each, default of one with 50% recovery: -250 USDC losses (-2.5% of portfolio)
A larger number of positions with the same total capital substantially reduces the maximum drawdown from a single event.
Four Axes of Diversification on 8lends
Number of Projects
Portfolio size
| Portfolio Size | Recommended number of projects |
|---|---|
| Up to $1,000 | 1–3 projects (at the start — priority on gaining experience) |
| $1,000–10,000 | 5–10 projects |
| $10,000–50,000 | 10–20 projects |
| $50,000+ | 20–40 projects |
Credit Ratings
Distribution across different ratings (AAA–CCC) provides a balanced risk profile:
- Conservative strategy — 70% of the portfolio in AAA-BBB, 30% in BB-B
- Balanced strategy — 50% AAA-BBB, 50% BB-B-CCC
- Yield strategy — 30% AAA-BBB, 70% BB-B-CCC
More about the rating scale
Loan Terms
Distribution across different terms (4–16 months) provides a flow of repayments throughout the year:
- Part of the portfolio is freed up every few months — this allows reinvesting into new projects
- Not all capital is locked for 16 months at once
- Liquidity is maintained for participation in attractive new projects
Example: a portfolio of 10,000 USDC at 1,000 per project — 4 projects of 4 months, 4 projects of 8 months, 2 projects of 12 months.
Type of Protection — Buyback vs Standard RWA
- Projects with Buyback — a third party buys out the position in case of default, returning the loan principal in full under the program's terms. The rate is usually slightly lower
- Standard RWA projects — protection through collateral realization, the rate is usually higher, but in case of default the recovery process takes 1–12 months
A balanced portfolio combines both types.
Summary Table — Example of a Diversified Portfolio
A 10,000 USDC portfolio for a balanced strategy:
| Project | Amount | Rating | Term | Type |
|---|---|---|---|---|
| 1 | 1,000 USDC | AA | 6 mo | Buyback |
| 2 | 1,000 USDC | A | 8 mo | Standard |
| 3 | 1,000 USDC | BBB | 8 mo | Buyback |
| 4 | 1,000 USDC | BBB | 12 mo | Standard |
| 5 | 1,000 USDC | BB | 12 mo | Standard |
| 6 | 1,000 USDC | BB | 4 mo | Buyback |
| 7 | 1,000 USDC | B | 6 mo | Standard |
| 8 | 1,000 USDC | B | 8 mo | Buyback |
| 9 | 1,000 USDC | BB | 16 mo | Standard |
| 10 | 1,000 USDC | BBB | 12 mo | Buyback |
This provides:
- 10 positions — a default of one = -10% of potential losses on face value, minus recovery through collateral/Buyback
- Distribution across 5 ratings — balanced risk
- Terms from 4 to 16 months — regular repayments for reinvestment
- 5 projects with Buyback + 5 standard — a dual protection mechanism
What Does NOT Count as Diversification
- 10 projects of a single borrower — this is still concentration (the risk of one company)
- 10 projects in one industry — sectoral risk (if the industry is in crisis, all suffer)
- 10 projects with the same type of collateral — if the market for this asset falls, the realization of all of them may suffer.
8lends provides transparency on the borrower, industry, and type of collateral on each project's card — this allows you to consciously avoid concentration.
When Diversification Is Less Critical
Diversification is a standard principle, but there are situations where its value is lower:
- Very small starting capital (100–300 USDC) — gas fees on many small positions can eat up the advantage. It is better to start with 1–2 projects and accumulate experience
- A test investment to study the platform — at the start it is not critical to diversify; it is more important to understand how payouts, claims, and the interface work
- A very short horizon — if you have a specific goal to use the funds in 4 months, it is simpler to choose one short project
Frequently Asked Questions
What is the minimum number of projects needed for proper diversification? The basic rule is a minimum of 5–10 projects. This is enough so that a default of one is a manageable event (10–20% of the portfolio). A larger number of projects (20+) provides an even smoother profile but requires more time for portfolio management.
Can I diversify through the Secondary Market? Yes. The Secondary Market allows you to buy positions in projects that are already closed for primary investments. This provides access to a wider pool for diversification — especially useful if there are few new projects on the primary market. More details
How often should I review the portfolio composition? Since the rate for a project is fixed at the moment of investment and does not change, active rebuilding of the portfolio is not necessary. It is enough to monitor the situation with your projects and reinvest incoming interest and principal repayments into new projects.
What matters more — having more projects or a higher average rating? Both factors matter and work together. A high rating reduces the probability of default on each individual project; diversification reduces the impact of any individual default on the portfolio. A balanced strategy uses both mechanisms.
Should I invest simultaneously on 8lends and other platforms? This is cross-platform diversification — a separate level of protection. If, in addition to 8lends, you invest in Maclear (EUR-fiat), Goldfinch (USDC, emerging markets), Maple Finance (institutional crypto lending), or others — this reduces the risk associated with a single platform. Each platform has its own risk profile (technological, legal, operational).
How can I diversify between the USDC stablecoin and other assets? 8lends works only with USDC. If you want to diversify across different asset classes (stocks, gold, real estate), this is done outside of 8lends. Within 8lends, diversification is limited to P2B lending in USDC, but it varies widely by borrowers, ratings, and terms.
Can I diversify using 8LNDS bonuses? 8LNDS tokens are a separate asset class with their own risk. Including them in a portfolio is a form of diversification between USDC yield and a crypto token with variable value. It is worth accounting for them separately, not as part of USDC yield.
See also:
Risk disclosure: investments on 8lends involve risk, including the possible loss of principal. Diversification reduces risk but does not eliminate it entirely. Past results do not guarantee future ones. 8lends is a platform operated by CLEARCHAIN CORP, registered with FINTRAC (Canada) as a Money Services Business. Maclear AG (Switzerland), a member of PolyReg SRO under the supervision of FINMA, acts as the Collateral Agent. Regulatory framework as of September 2026.