BERLIN, GERMANY / ACCESSWIRE / August 5, 2021 / Centrifuge and the MakerDAO community are continuing their collaboration in connecting DeFi lending with real world assets, increasing the initial debt ceiling for four more Tinlake pools to enable borrowing over 40M DAI with real world collateral.
The four Tinlake pools, Centrifuge's "real world DeFi" platform where Asset Originators (AOs), can finance their business by sourcing crypto liquidity and tapping into MakerDAO liquidity. AOs are real businesses that are onboarded onto the Tinlake platform, and are able to provide financing by minting an NFT representing real world collateral. The collateral types can include outstanding invoices, real estate, revenue sharing agreements, real world loans and other types of finance arrangements.
The Asset Originators commit to repaying holders of two types of tokens related to the vault, the DROP and TIN tokens. These represent senior and junior tranches of the loan, respectively, and offer a different type of risk/reward ratio for holders. DROP holders are first in line and have the value of their loan backed by TIN holders, who represent the junior tranche. DROP holders receive a comparatively lower interest rate in exchange for this guarantee, while TIN holders can obtain higher returns at the cost of higher risk.
As part of Maker's Real World Asset (RWA) initiative, the DeFi platform is onboarding Centrifuge's DROP tokens as a collateral type, allowing users to mint DAI backed by the tokens. This means that DROP holders can leverage their tokens to obtain a larger exposure to the DROP interest rate, or alternatively receive an effective "advance" on their DROP yield by creating liquid DAI. This integration vastly increases the total liquidity available to AOs on the Tinlake platform.
Adding to existing vaults RWA-001-A and RWA-002-A, which included DROP tokens from 6s Capital and New Silver, the Maker community passed an executive vote to onboard RWA-003-A through RWA-005-A, featuring DROP tokens from ConsolFreight, Harbor Trade Credit and Fortunafi. A further RWA vault from People's Company will be added at a 0 DAI debt ceiling, meaning that it cannot be immediately used.
"This move continues to connect DeFi to the trillions in assets in the real world. This cements how DeFi is moving to create a more open and fair financial system for everyone.," said Lucas Vogelsang, Co-Founder of Centrifuge. "Having onboarded the first asset class seamlessly back in April, the collaboration between MakerDAO and Centrifuge will continue to onboarded even more diverse assets to the space. A significant number of Tinlake users now have access to improved capital efficiency, while the Maker community achieves meaningful diversification for DAI's collateral. It's a win-win situation for the projects, the issuers using our platform and the DeFi space as a whole."
"Real World Assets have the potential of unlocking the teeming potential of DeFi in terms of ease of use and permissionless access to liquidity, simplifying the arcane world of traditional finance," said Sébastien Derivaux, Head of Real World Assets at Maker. "For the Maker protocol, we see RWAs as the way to decrease reliance on highly correlated crypto assets and ultimately make the protocol more resilient."
Centrifuge is the platform connecting businesses and people to the world of decentralized finance, allowing them to obtain frictionless funding and source liquidity without having to rely on traditional middlemen. Centrifuge manages the legal and technical process to bridge assets between DeFi and the "real world" while ensuring full composability with the decentralized finance ecosystem on Ethereum and other blockchains. Centrifuge operates as an independent blockchain based on Parity's Substrate, connected together with the Ethereum-based Tinlake lending platform.
MakerDAO is a decentralized organization dedicated to bringing stability to the crypto economy. MakerDAO issues Dai, the world's first decentralized stablecoin on the Ethereum blockchain. Dai eliminates volatility through an autonomous system of smart contracts, specifically designed to respond to market dynamics. Launched in 2017, Dai has successfully maintained a soft peg to the US dollar. With a presence on numerous cryptocurrency exchanges, multiple partnerships with global supply chain companies, and agreements with organizations serving non-government agencies, MakerDAO is unlocking the power of the blockchain to deliver on the promise of economic empowerment today.