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Centrifuge and MakerDAO Bring Real World Assets To DeFi

Centrifuge and MakerDAO Bring Real World Assets To DeFi
  • MakerDAO and Centrifuge are taking their partnership further.
  • The two are collaborating with real world assets to improve their DeFi lending platform.
  • Users can use real world assets for collateral and gain higher returns.

The MakerDAO community and Centrifuge are collaborating with real-world assets to further enhance the DeFi lending experience. This new connection will help increase the initial debt ceiling for four additional Tinlake pools to allow for borrowing over 40 million DAI with Real World collateral.

The Co-Founder of Centrifuge, Lucas Vogelsang, says,

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. 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.

Following the initial collaboration, a huge number of Tinlake users are now enjoying perks such as access to improved capital efficiency. Meanwhile, the Maker community went on to achieve meaningful diversification for DAI’s collateral. All in all, it’s a win-win situation for both projects, the issuers on the platform, and the DeFi space in general.

In detail, the four Tinlake pools — Centrifuge’s real world DeFi platform will finance their business. It will do so by using the Asset Originators (AOs). Specifically, it will source crypto liquidity and tap into MakerDAO liquidity.

The AOs are real businesses that joined the Tinlake platform. Hence, by minting an NFT representing real world collateral, they are able to provide financing. To highlight, collateral types include real estate, revenue sharing agreements, real-world loans, outstanding invoices, and other kinds of finance agreements.

In return, the AOs make sure to repay holders of two kinds of tokens to the vault. These include the DROP and TIN tokens. Acting as the senior and junior tranches of the loan, they offer a different kind of risk/reward ratio for the holders.

For instance, DROP holders will be first in line. More so, the value of their loan will be backed by TIN holders. However, DROP holders get a lower interest rate in exchange for this guarantee. In comparison, TIN holders get higher returns for taking a higher risk. The Real World Asset (RWA) initiative is getting the DeFi platform onboard Centrifuge’s DROP tokens as a type of collateral. This will allow users on the platform to mint DAI that are backed by tokens. In turn, DROP holders can begin to leverage their tokens to get greater exposure for the DROP interest rates.

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