DeFi Major Changes: Maker and Centrifuge Issue the First Batch of Real-World DeFi Assets

This article was published on IOSG, author: Lea Schmitt.

Centrifuge and Maker complement each other, connecting the real world to trustless DeFi. On one hand, Centrifuge has been collaborating with traditional SMEs and financial institutions to provide a robust infrastructure that connects both parties, ultimately achieving a multi-party integration based on transparency, efficiency, and trustlessness. On the other hand, Maker governance enables instant liquidity for asset originators' assets at minimal cost.

The Maker protocol, also known as the Multi-collateral DAI (MCD) system, is currently the largest DeFi protocol, with billions in collateral. It allows users to generate DAI using collateral assets approved by "Maker Governance."

The collaboration between Centrifuge and Maker means that asset originators (shadow banks) can easily mint tokens through Centrifuge to gain additional returns. In other words, they can have Maker Vaults, lock their tokenized assets, and withdraw stablecoins to fund new loans. Asset originators will NFT their real-world assets and collateralize them on platforms like MakerDAO to obtain loan limits (specific operations have been explained in our previous articles). This way, we can imagine a "bank" that operates around the clock, issuing credit to borrowers, running trustlessly on smart contracts, with no intermediaries and no regulatory constraints, providing low interest rates and instant liquidity at minimal capital costs.

Where to Go from Here?

The potential of RWA (Real World Assets) is enormous. RWA encompasses anything and any entity that can be digitized. Centrifuge is working with a diverse range of asset originators to provide financing for assets including invoices, real estate, or music royalties. Currently, six companies are actively involved in the MakerDAO governance process, and they plan to scale RWA together over the next 12 months, with MCD volumes reaching 300 million.

As more RWA applications are developed, DAI will become the world's most diverse borderless currency. The combination of Centrifuge and Maker can make DeFi more competitive and scalable compared to traditional asset financing.

MKR and Centrifuge Issue First Real World DeFi Assets

Centrifuge enabled the first financial institution, New Silver, to establish a property repair flip loan pool in its Tinlake contract, relying on MakerDAO as the credit facility to complete the first loan financing. New Silver now has a credit line of $5 million with Maker, becoming the first financial institution to support DAI with RWA, opening the door to a new trillion-dollar market in DeFi.

Through Centrifuge, real-world financial institutions can operate around the clock, running trustlessly on smart contracts, providing low interest rates, and offering instant liquidity at minimal capital costs.