Centrifuge

Centrifuge, a blockchain-based platform, was founded in 2017 to address inefficiencies in the financial system by leveraging blockchain technology. The platform focuses on integrating real-world assets into decentralized finance, providing on-chain management of capital structures and enhancing transparency for investors.

In 2021, Centrifuge achieved significant milestones. It integrated the first real-world asset pool with MakerDAO, marking the first loan to use MakerDAO as a credit facility and the first instance of a stablecoin (DAI) being backed by real-world assets. Later that year, the RWA Market was launched, utilizing the Aave protocol to bring liquidity to real-world assets on Centrifuge.

In 2022, BlockTower Credit became the first institutional credit fund to bring its collateralized lending operations on-chain by funding $220 million of real-world assets through Centrifuge, with MakerDAO providing $150 million of senior capital to BlockTower's Centrifuge pools. This marked the largest on-chain investment in real-world assets.

In 2023, Centrifuge launched Centrifuge Prime, a product designed to help DeFi-native organizations onboard and scale a portfolio of real-world assets. The platform also held the first Real-World Asset Summit, bringing together leaders from both traditional and DeFi to accelerate the future of the tokenized asset industry. Additionally, Centrifuge was one of the founding members of the Tokenized Asset Coalition alongside industry leaders like Circle and Coinbase.

Centrifuge has also released Liquidity Pools, smart contracts that can be deployed on any EVM-based chain, allowing users on these chains to invest in pools on Centrifuge.

Centrifuge is a decentralized finance (DeFi) protocol that allows users to borrow against real-world assets such as invoices, real estate, and machinery. It is built on the Ethereum blockchain and uses a decentralized autonomous organization (DAO) to govern the protocol. Centrifuge aims to make it easier for businesses to access capital without relying on traditional financial institutions like banks.

Centrifuge tokenizes real-world assets by converting them into non-fungible tokens (NFTs). These NFTs are then granted entry to the blockchain world, allowing them to be funded via Tinlake, Centrifuge’s first decentralized application (dApp). This process enables liquidity to be accessed on Ethereum and other chains, ensuring that DeFi projects are protected from destabilizing events by adding uncorrelated collateral.

The native token of Centrifuge is CFG, which is used to pay for transaction fees, participate in governance, and earn rewards. As a governance token, holders of CFG can vote on proposals that affect the Centrifuge protocol. CFG is also a security token, representing ownership in the protocol and giving holders a stake in its future.

To borrow against real-world assets, users must create a collateralized debt position (CDP), which is a smart contract that stores the user’s assets. This CDP is then used to secure the loan, allowing users to access capital without the need for intermediaries like banks. The protocol uses a proof-of-stake consensus mechanism to verify transactions, making it more energy-efficient and scalable than traditional proof-of-work blockchains.

Centrifuge aims to bridge decentralized finance with real-world assets, lowering the cost of capital for small and mid-sized enterprises and providing investors with a more stable source of income. It also seeks to remove volatility from profits made through crypto by allowing users to generate profits not tied to crypto assets themselves. Additionally, Centrifuge can unlock new economic opportunities by granting users regular income in the form of rewards for staking their assets.

Centrifuge has launched an onchain fund management platform, which automates fund operations to improve reporting cadence and integrate with third-party services. This platform brings the power of onchain finance to asset managers and investment funds, allowing them to capture their onchain and offchain portfolio positions, transactions, and operations data through a single platform.

Overall, Centrifuge is designed to revolutionize the way businesses access capital by providing a faster, more affordable, and more transparent alternative to traditional financial systems.

Centrifuge (CFG) has several strengths that contribute to its unique value proposition:

1. Unlocking Liquidity for Real-World Assets: Centrifuge is designed to bridge the gap between decentralized finance (DeFi) and real-world assets, allowing for the tokenization of assets like invoices, real estate, and royalties. This unlocks liquidity for these assets, making them accessible to a broader range of investors and borrowers.

2. Comprehensive Toolkit for DeFi-Native Organizations: Centrifuge Prime offers a suite of services and technologies tailored to help DeFi-native organizations, such as DAOs, stablecoins, and protocols, easily integrate and expand their portfolios of real-world assets. This includes a compliance legal framework, tokenization and issuance platform, credit risk and financial reporting, and diversified asset classes and issuers.

3. Industry Infrastructure Product: Centrifuge Prime serves as an industry infrastructure product, providing a comprehensive set of tools and services to support the growth of DeFi-native organizations. This positions Centrifuge as a key player in the DeFi ecosystem.

4. Established Credit Group: The Centrifuge Credit Group, comprising nine members with extensive knowledge in lending and financial products, ensures fair and objective reviews for lending pools on the Centrifuge protocol. This adds credibility and stability to the platform.

5. Security and Interoperability: Centrifuge Chain is built on the Substrate framework and shares the security of the Polkadot network. It also provides connectors for direct integration with any generic EVM blockchain, making it highly interoperable.

6. Governance and Tokenomics: The CFG token is used for on-chain governance, allowing holders to steer the evolution of Centrifuge without reliance on centralized parties. The token model is designed to incentivize early participation, maintain a stable supply, and align incentives with the long-term growth of the ecosystem.

7. Customizable Risk-Return Profiles: Centrifuge offers three investment tiers (senior, junior, and mezzanine tranches), allowing investors to customize their risk-return profiles according to their preferences. This flexibility is particularly useful for different types of investors.

8. Bridging DeFi with Traditional Finance: By tokenizing real-world assets and providing access to DeFi liquidity, Centrifuge helps bridge the gap between traditional finance and decentralized finance, offering a more stable source of income for investors and lower costs for borrowers.

These strengths position Centrifuge as a robust and innovative platform that addresses key challenges in the DeFi space, making it an attractive option for investors and users alike.

Centrifuge (CFG) is associated with several risks. One significant risk is its recent price movement, which indicates a high risk ranking due to its relative price movement compared to trading volume.

Another risk is related to its partnerships. Centrifuge has partnered with FRAX, which is considered an unsustainable stablecoin and potentially a fraud. This partnership raises concerns about the legitimacy of Centrifuge's operations and the accuracy of its metrics.

Additionally, Centrifuge has been accused of attempting to claw back rewards from over 18,000 users who supported its parachain spot, which has led to mistrust among users.

Furthermore, the project's due diligence in selecting partners has been questioned, particularly with regards to Finoa, a custodian that has faced financial problems and has been accused of mistreating employees.

Centrifuge's risk profile is also reflected in its Risk/Reward Score, which is classified as high, indicating that the risks may outweigh the potential rewards.

• Lucas Vogelsang: Co-founder of Centrifuge.
• Maex Ament: Co-founder of Centrifuge.
• Martin Quensel: Co-founder and Board Member of Centrifuge.
• Cassidy Daly: Co-founder of Centrifuge.
• Bhaji Illuminati: Co-founder of Centrifuge.
• Jeroen Offerijns: CMO of Centrifuge.
• Eli Cohen: CTO of Centrifuge.
• Philipp Banhardt: Team member of Centrifuge.
• Matt Wagoner: Team member of Centrifuge.
• Asad Khan: DeFi Politician and external ambassador of Centrifuge.
• Julia Merkel: COO of Centrifuge.
• Sonam Joshi: Head of Product at Centrifuge.