1. Introduction
The fintech world is built on a centralized financial system, but this system benefits big banks and institutions. DeFi and blockchains can fix this problem. However, these are still entirely new areas, not yet widespread, so developing new functions is essential to attract new users. Meanwhile, the amount of assets in the real world of up to trillions of billions has not yet been exploited effectively, and there are many inadequacies to be solved.
Centrifuge was one of the first protocols to connect DeFi to the real world as it offers access to a market of trillions of dollars in untapped real-world assets (RWA). Businesses use Centrifuge to access the liquidity that DeFi provides.
The project aims to bring the opportunity to participate in Defi for everyone by connecting borrowers with money lenders in a transparent, cost-effective way, free of intermediaries with low fees, avoiding the inefficiency of traditional finance.
2. Market Analysis
In 2021, CoinMarketCap calculates a total market capitalization of $70 Billion for decentralized finance (DeFi). This market tended to grow strongly, up to 143% in the first two months of 2021. For a better overview of the market’s potential, let’s take a look at total global assets in 2019 that reached $360.6 trillion (According to Credit Suisse). What do you think if a part of them joins DeFi?
Similar projects:
XPRT (Persistence) ($258M as of 6/7/2021) represents 0.31% of the total market capitalization.
TOKO ($3M as of 6/7/2021) accounts for 0.003 % of the total market capitalization.
It is a large market, so there is still plenty of space for new potential products and projects to participate and develop. In addition, connecting Defi with real assets is an explosive trend soon because the demand comes from reality.
3. Product Highlight
Centrifuge Chain
Centrifuge Chain is the home for on-chain real-world assets (RWA). A Proof-of-Stake blockchain built on Substrate allows users to put their assets on the chain as non-fungible tokens (NFT). This is the starting point to open the door for any asset class to enter the world of DeFi. Centrifuge Chain uses a native token – the Centrifuge (CFG) token. It also incentivizes nodes (called Collators) and Nominators to participate through a block reward. This public chain cannot be owned and operated by anyone: Centrifuge token empowers its owners with on-chain governance that empowers token holders to drive Centrifuge’s growth. The chain also uses Centrifuge tokens for staking value and rewards security and Centrifuge adoption through liquidity rewards.
Centrifuge is built on Parity Substrate and is currently transitioning from sovereign chain to parachain on Polkadot. It relies on staked nodes (Collators) to generate blocks; once Centrifuge Chain becomes parachain, they will maintain Centrifuge parachain by collecting transactions from users and generating state transition proofs Polkadot Relay Chain validators. Any node can nominate themselves as a Collator candidate, but only a limited number will be selected. Only the top Collators by stake will be chosen to the Active Set. Collators can stake their CFG and can be elected by staked Nominators.
To secure a parachain slot, Centrifuge will hold a Crowd Loan from DOT holders in the Parachain Loan Offering. DOT holders who stake their tokens on behalf of the Centrifuge parachain slot will receive CFG as a reward.
Tinlake
Tinlake is the first Dapp built on the Centrifuge chain. It is an asset-backed lending app that allows users to access financing using DeFi. Assets are converted into NFTs on Centrifuge Chain, then funded through Tinlake. Tinlake currently funds over ten asset classes and has a TVL of over $25 million (Data on 6/7/2021).
Tinlake allows collateral-based on-chain borrowing that is fully managed by smart contracts. Tinlake not only gives Asset Originators access to growing liquidity in the Decentralized Finance (Defi) ecosystem, it also allows stablecoin issuers to provide a store of value Stability backed by collateral pools. Ultimately, Tinlake will become a fully decentralized financial protocol compatible with different blockchains and connects to various funding sources, including different stablecoins.
P2P and Node Protocols
The P2P protocol provides a method for creating, exchanging, and verifying asset data and is used for private, off-chain data exchange. Asset originators can selectively share asset details with service providers, who can evaluate data, contribute underwriting and valuation information to the document. The origin of data can be verified using cryptographic signatures. The components of the P2P protocol are a collection of Ethereum smart contracts and a peer-to-peer (P2P) network deployed on top of libp2p. Ethereum smart contracts are used for:
- Maintain identity in a format similar to the ERC725 standard
- Fixed commits of state
- Mining NFTs from off-chain Centrifuge documents
The Centrifuge Node provides a simple API interface to interact with the peer-to-peer network and Ethereum smart contracts.
Integrations/Composability
The relationship of ETH/DOT
Centrifuge Chain is the bridge between the Ethereum and Polkadot ecosystems – bringing DeFi liquidity from both to funding real-world assets on Tinlake.
This gives Centrifuge an advantage in accessing two of the largest ecosystems in the Crypto market: one for today’s DeFi liquidity (ETH) and one for a speed and evolving ecosystem (DOT).
Current Integrations
Centrifuge Chain is built on a substrate and has been connected to Ethereum since day one via Tinlake. This allows the project to participate in on-chain DeFi liquidity on their partner platforms: MakerDAO and Aave.
With MakerDAO, Centrifuge has collaborated as the first protocol to support multi-collateral DAI with tangible assets are tokenized. This is an essential milestone for MakerDAO and the DeFi ecosystem as it not only diversifies collateral risk but also bridges trillions of dollars with DeFi. On the other hand, DeFi opens up a whole new “financial universe” for companies already plagued by the prevailing financial system. Predatory lending institutions are replaced by smart contracts: a decentralized line of credit approved by the DAO.
After MakerDAO, Centrifuge innovates with Aave and other major DeFi protocols to unlock instant liquidity.
Whitepaper: Papers are publicly available and transparent. Details can be found at Protocol for private by design transactions on a decentralized network.
Github: Public and regularly updated. Details can be found at Centrifuge · GitHub.
The product status: Tinlake is quite complete, easy to use, with specific instructions right on the website. You can experience it at Tinlake.
4. Unique Selling Point (USP)
Double Total Value Locked (TVL) every month
The centrifuge has been listed in a new Real-World Assets (RWA) Total Locked Value (TVL) growth. Once encrypted, real-world assets, such as bills, real estate, royalties, and others, have the potential to bring trillions of new investments to DeFi. Centrifuge tokenizes real-world assets by converting them to NFTs on the Centrifuge Chain. RWA TVL measures the value of active real-world assets used to fund Centrifuge.
Breaking Ground in Polkadot
Centrifuge has the highest TVL in the Polkadot ecosystem – and will be one of the first projects to launch Parachain on Polkadot. Centrifuge is built on Polkadot for fast speed and low transaction fees, while the project’s Dapp, Tinlake, is constructed to access the massive liquidity on Ethereum. Native token CFG has its own bridge to Ethereum.
Integration with DeFi’s flagship projects
Centrifuge brings the first real-world assets back to MakerDAO’s DAI and works on Aave’s first real-world asset marketplace. Direct integration into other DeFi protocols allows Centrifuge users to gain instant liquidity and makes DeFi protocols more secure against destabilizing events by adding unrelated collateral.
5. PR & Marketing
Telegram (Telegram: Contact @centrifuge_chat) – There are more than 7400 active members.
Twitter (Centrifuge (@centrifuge)) – Has more than 14,400 followers.
Discord (https://discord.com/invite/yEzyUq5gxF) – Has nearly 3000 active members.
Medium (Centrifuge – Medium) – Regularly post updates on the progress of project and knowledge related to Defi
News: Information about the Centrifuge project has appeared on major news channels such as Coin Desk, The Block, Substack, banklesshq,… You can read it all at News.
6. Investors and partners
According to Crunchbase, Centrifuge has gone through four rounds of VC funding and received a total of nearly $12 million.
Investors:
In addition to the famous investment funds mentioned above, Centrifuge also received funding from The European Regional Development Fund – The European Union’s Regional Development Fund. This shows that Centrifuge is not only attracting interest from private funds and attracting government organizations, increasing the credibility of the project.
Partners:
7. Team
Centrifuge’s team is very diverse, coming from both traditional and crypto fields. The Centrifuge team includes alumni from many of the world’s top institutions, including Consensys, Electric Coin Company, Parity, Goldman Sachs, Credit Suisse, SAP, Microsoft, Deloitte, United Nations, Federal Reserve, and more. The founding team includes:
Lucas Vogelsang (Lucas Vogelsang – CEO and Cofounder – Centrifuge)
CEO & Co-Founder
Former CTO and co-founder of DeinDeal – An e-commerce startup in Switzerland. Later, the company was acquired by Ringier – One of the largest media groups in this country.
Former Engineering Manager of Taulia – A US-based fintech company
Martin Quensel (Martin Quensel – Co-Founder & MD – Centrifuge GmbH)
CFO & Co-Founder
As an entrepreneur with extensive experience in the fields of Fintech and Crypto
Co-Founder Taulia – Fintech company providing working capital management, electronic invoicing, and supply chain finance services.
8. Roadmap
The project has achieved previously set milestones:
2018 – Seed round: Invested 8 million USD by Mosaic, BlueYard,…
2020 – SAFT (Simple Agreement for Future Tokens) Round: Invested $4.3 million from Fenbusi, Galaxy Digital, IOSG…
2021 – Centrifuge Token Sale on Coinlist: was made from May 26 – 31, 2021.
28/06/2021 – Centrifuge introduced Altar — The home for financing assets on Kusama Network. It was built for risk-takers and innovators who dare to push the limits of DeFi: powered by the $AIR token.
The following plan is still being updated…
Based on the milestones that the centrifuge team has set and implemented on time with high efficiency in the past. This also demonstrates the commitment and trustworthiness of the project.
9. Token Economy
Token Distribution
Total: 425,000,000 CFG
Token Utility
Centrifuge Token (CFG) functions differently and is used for standard network functions such as chain security and transaction fees and a unique utility including on-chain governance. Users have incentives to participate in the network through Centrifuge token rewards. As a result, the users of Centrifuge are directly empowered to operate, control, and gain value from the platform.
Network Valuation & Asset Pricing
(This price is in the Bitz trading IOU version of this token and not the official CFG asset)
Because the token was only released on Coinlist on May 28, 2021, there has not been yet much data on the token price. However, in the last public sale, CFG was priced at $0.55 and $0.38 for Option 1 and Option 2 respectively. You can see it as a benchmark for your future investment decisions.
