This article explains how Aave Arc, RWA Markets, and Centrifuge cut into real finance.
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Leverage is a double-edged sword. Reasonable leverage can maximize returns within manageable risks. In the crypto world, there are on-market leverage and off-market leverage. OTC refers to borrowing some resources in reality and then investing them in cryptocurrencies, while OTC mostly refers to using some protocols to mortgage tokens to borrow liquidity, and even for futures in exchanges, the multiples are also on the market. A type of internal leverage. So today, let’s talk about the leverage of one of the models: how do Aave Arc, RWA Markets, and Centrifuge cut into real finance?
Decentralized lending platform Aave (AAVE) has launched its permissioned lending and liquidity service, Aave Arc, to help institutions participate in compliant decentralized finance.
Unlike its permissionless cross-chain counterpart on the platform, Aave Arc is a permissioned liquidity pool designed for institutions to maintain regulatory compliance in the decentralized finance (DeFi) space.
The first of 30 entities whitelisted by Aave Arc is Fireblocks, an institutional digital asset custodian. It explained in a previous announcement that the pool “enables whitelisted institutions to safely participate in DeFi as liquidity providers and borrowers.”
Users of Aave Arc must perform due diligence procedures such as Know Your Customer and Anti-Money Laundering (KYC, AML) to gain access.
Fireblocks also acts as a whitelist proxy for Aave Arc, ensuring KYC, AML requirements are enforced by other institutions wishing to join the authority pool. Aave itself cannot perform this task as it is not a regulated entity such as a bank or other traditional financial institution. As a whitelist agent, Fireblocks has approved “30 licensed financial institutions to participate in Aave Arc as suppliers, borrowers and liquidators.”
Some of the whitelisted entities include Anubi Digital, Canvas Digital, CoinShares, GSR, and crypto yield aggregator Celsius.
RWA Market – Real World Asset Market, RWA Market is built on the Centrifuge and Aave protocols, and is the first diversified real-world asset market on the Aave protocol, connecting DeFi with the unlimited potential of the real world. RWA Market has launched seven pools and already allows liquidity providers to deposit USDC.
How does this work? The Aave protocol allows for the creation of marketplaces where users can borrow tokens by depositing collateral. Interest rates fluctuate up and down according to market utilization.
RWA Market, powered by END_Labs, allows businesses to use crypto to finance their tokenized real estate bridge loans, trade receivables, cargo and freight forwarder invoices, branded inventory financing, and income-based financing. Allows users to diversify their portfolios with uncorrelated stable assets.
With RWA Market, the TradFi world is moving towards DeFi. Aave is one of the pioneers of RWA in the DeFi space, and it comes in the form of the first permissioned pool, a big step for Aave’s wider adoption in traditional finance. Aave users who previously could only borrow against crypto-native assets can now earn with stable, uncorrelated real-world collateral.
This project is a pioneer in connecting RWA to the DeFi space. In April 2020, the project was the first to launch RWA as collateral for Maker. With Aave and Maker Centrifuge, issuers now have more sources of liquidity, further diversifying their capital.
Stani Kulechov, founder and CEO of Aave, said:
“The RWA marketplace is a much-needed building block, not just for protocols like Aave, but for DeFi in general. Removing barriers to entry and making DeFi accessible to all is part of Aave’s corporate vision, and we’re excited to deliver Real-world asset staking enabled by Centrifuge to achieve this.”
Issuers create pools for their assets. Investors buy tokens from these pools by depositing stablecoins into the pools. Issuers can then borrow stablecoins of these assets and convert them into fiat currency for real-world borrowers. The performance of all pool assets and portfolios is fully transparent on-chain, visible not only to investors but to all; open and transparent. Funding pools typically focus on specific asset classes, such as real estate or trade finance.
In the RWA market, when the fund pool needs funds, the issuer can not only choose to accept direct investment, but also deposit the fund pool token into the Aave protocol to borrow directly from any RWA market investor. Through this protocol, RWA Market investors gain access to a diversified portfolio of high-level secure real-world assets on the Centrifuge protocol that are completely unrelated to crypto-assets.
The RWA market connects the world of regulated TradFi with the world of trustless DeFi. I have to say, it was an amazing attempt.
Centrifuge is a network that provides fast, reliable funding for small businesses and stable yields for investors.
Tinlake is Centrifuge’s investment app that acts as an open marketplace for real-world asset pools. Investors can view the capital pools provided by asset originators and invest in the capital pools that are suitable for them.
Centrifuge Chain is home to on-chain real-world assets (RWA). It is a Substrate-based proof-of-stake blockchain that enables users to list their assets as NFTs. This is the starting point for unlocking financing for any type of asset through DeFi. Centrifuge Chain bridges to Ethereum but uses its own native token – the Centrifuge (CFG) token.
Centrifuge token (CFG) is a cryptoeconomic primitive and native token that leverages the nominated proof-of-stake consensus algorithm to stake validators and provide incentives for Centrifuge adoption. CFG empowers holders to guide the development of Centrifuge through on-chain governance.
Centrifuge connects real-world assets to DeFi (Decentralized Finance) to reduce the cost of capital for SMEs and provide DeFi investors with a stable source of income independent of volatile crypto assets.
In today’s financial system, only the largest businesses have direct access to liquid capital markets. Most rely on banks to meet their capital needs. The lack of an open and transparent market prevents these small businesses from obtaining competitive interest rates, mainly due to market inefficiencies and transaction costs.
DeFi is an evolving financial system without any barriers to entry. Centrifuge hopes to bring this benefit to all borrowers who have hitherto had no access to DeFi liquidity.
Through Centrifuge’s first user-facing product, Tinlake, Centrifuge allows anyone to launch an on-chain credit fund, creating a pool of mortgage-backed loans. Tinlake provides an easy way for any business to tap into DeFi liquidity. For DeFi investors, these assets will generate safe, stable yields on their funds independent of the attractive but volatile returns in the crypto market. Through CFG Rewards, investors can gain additional benefits and participate in the ecosystem.
Tinlake is currently built on Ethereum, but in the future it will be fully migrated to Centrifuge Chain and a secure p2p protocol. This will allow accurate pricing and risk assessment of any type of asset and create a liquid market for these assets. As this ecosystem grows, more data will be on-chain reducing trust in the off-chain world and reducing reliance on single points of failure.
RWA Market is supporting both real businesses and investors on the asset side to make financing more accessible to everyone around the world.
Again, DeFi is a smart contract-based decentralized financial system that operates without intermediaries such as banks or insurance. DeFi applications strive to enable traditional financial services in a permissionless, global and transparent manner primarily built on the Ethereum blockchain.
This is a whole new economy with no borders, banks or government-controlled currencies. Centrifuge is built within the DeFi economy and will soon integrate directly with other DeFi protocols like Maker or Aave, but it also builds an easy way to land traditional finance: NFTs.
Centrifuge allows businesses to tokenize various aspects of their business, such as trade receivables and invoicing. Once successful, these assets can be used as collateral to lend cash, increasing liquidity and playability.
But it is worth noting that the tightness of the loan is a very deep thing (as is the degree of water release). Once the scale is not well grasped, the thunderstorm event is no joke.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/is-it-not-reliable-to-combine-traditional-economic-lending-on-the-chain-anyway/
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