A new platform called Centrifuge is launching today. Centrifuge presents themselves as the Decentralized Asset Financing Protocol introducing a new way to finance assets and unlock capital for the next generation of finance.
When the Centrifuge team started building the company in early 2018, the term DeFi didn’t exist. They were excited to bring Trade Finance to Ethereum and knew that in doing so, the team would open cryptocurrencies and blockchains to a new audience. Since then, DeFi has turned into the fastest-growing segment in crypto. Centrifuge finds itself in the middle of a young ecosystem that is ready to prove itself in the finance world: by building what is needed to lend against real-world assets safely, businesses around the world can tap into this new source of capital.
The launch of Centrifuge revolves around two major releases: an asset-backed lending Dapp called Tinlake and the general availability of the Centrifuge Chain mainnet.
Tinlake is a securitization Dapp on Ethereum which lets investors and borrowers finance their own asset pools. Tinlake’s smart contracts are open source and integrate easily into the DeFi ecosystem. Tinlake uses Centrifuge Chain to originate individual non-fungible assets used as collateral for loans.
Centrifuge Chain is an open and permissionless Proof-of-Stake blockchain built on Substrate. This is the starting point for originating real-world assets. It enables users to bring their assets on-chain as non-fungible tokens (NFTs). NFTs are easily bridged to Ethereum from day one. Centrifuge Chain is powered by the Radial token, which empowers its holder with governance and provides the incentive for validators to operate the chain. Centrifuge launches with over ten validators securing the chain.
Tinlake + Centrifuge Chain = Centrifuge 🌀
With Centrifuge Chain and Tinlake, any business can now originate their real-world asset on-chain and access liquidity through Centrifuge.
To show what the future of asset financing could look like, Centrifuge is showcasing two of their first asset originators: ConsolFreight, a logistics liquidity provider and Paperchain, advancing streaming revenue payments for music artists. The asset originators launch their Tinlake pools, making them available to anyone to invest. Investors can browse through a list of pools to finance based on asset type and risk. All of this happens without any third party; transactions are settled trustlessly on-chain:
According to Centrifuge, the fintech world is still very much built on centralized financial systems in favour of big banks and large institutions. DeFi and blockchains can change this. This is how:
Bankless: A borrower can receive a loan extended from a smart contract that lives online. Centrifuge builds a bridge for borrowers and investors to access a decentralized financial system.
More Liquidity: Today securitizations are expensive and therefore only done by larger corporations. Centrifuge’s automated process using smart contracts allows any business to pool their assets to create liquidity: from mortgages to SME invoices.
Flexible: Once onboarded in Tinlake, investors can immediately start investing in asset pools. Tinlake is built to eliminate bureaucracy and mitigate risk with better data and trustless technology.
DeFi is hungry for new users and use cases. Assets in the real world are not measured in the millions but trillions. Centrifuge’s new type of assets brings another dimension to DeFi:
Scaling DeFi: By originating assets on-chain, Centrifuge is moving more of the world’s value into DeFi. Financing these NFT assets with stablecoins opens up DeFi to scale to the trillions. The more assets staked in DeFi, the more markets outside of the crypto bubble get pulled into DeFi.
Diversification = Decentralization: It is impossible completely to eliminate the centralized origin of real-world assets just yet, but we can diversify the types of assets that back DeFi currencies.
When BTC goes down, cryptocurrencies go down. Only adding other decentralized cryptocurrencies as collateral can pose a bigger centralized threat than the risk of adding diversified real-world assets.
A New Way to Stake in DeFi: DROP and TIN are the ERC20 tokens Tinlake issues against a loan portfolio. These tokens are stable, backed by the individual loans, but also interest-bearing: this creates a whole new way to stake in DeFi and in crypto. Read more about how this system works.
Centrifuge is changing the way the world accesses financing. The company believes that it has cracked the code for financing any kind of asset with DeFi–unlocking capital at a scale previously unimaginable. The Centrifuge chain is built as a foundation for the decentralized finance grid, providing the gateway for any real-world asset to enter the blockchain multiverse. According to Centrifuge, this grid will soon be large enough to enable all of the world’s assets to move in and out of blockchains, assembling the next generation of finance.