As a seasoned researcher with a penchant for all things decentralized and blockchain-related, I find the recent move by Centrifuge Protocol particularly intriguing. With my years of experience in this dynamic field, I’ve witnessed the transformative power of DeFi and its potential to reshape traditional finance.
To boost the expansion of the institutional decentralized financial (DeFi) sector, Centrifuge (CFG), a well-known decentralized asset financing protocol, has unveiled plans to launch a lending market in collaboration with multiple web3 projects. As per the announcement, this new lending market by Centrifuge will utilize collateral assets backed by U.S. Treasury tokens, made possible through Morpho protocol’s vault system.
The Centrifuge protocol constructed and launched its entire lending market on the Base network, a scalable Ethereum (ETH) solution supported by Coinbase Global Inc (NASDAQ: COIN). This allows institutional investors to quickly access Circle’s USDC without encountering issues related to banks or liquidation fees when using their chosen collateral as security.
On our freshly introduced lending platform, you’ll find the following assets that can serve as collateral: Anemoy Liquid, Treasury Fund (abbreviated as LTF), MidasShort Term U.S. Treasuries (commonly known as mTBILL), and Hashnote’s United States Yield Coin (often referred to as USYC).
In simpler terms, Lucas Vogelsang from Centrifuge protocol explains that the RWA market with Morpho is designed to provide practical use for these tokens. If you own a Treasury bill and require some USDC for a short period (hours or days), this service allows you immediate access without needing to go through the complex process of redeeming it, waiting for issuers to return dollars, and potentially paying fees. Essentially, it offers instant liquidity without having to physically redeem the asset you’re using as collateral for borrowing.
Centrifuge Protocol and RWA Adoption
This year, Centrifuge Protocol disclosed they had raised $15 million during a series A funding round jointly led by ParaFi Capital and Greenfield. The firm emphasized their goal is to utilize DeFi technology to bring institutional investors into the web3 realm in a secure and compliant manner.
By collaborating tightly with the Base network, which has experienced a substantial increase in daily active users within the Ethereum system, Centrifuge is confident about its potential for continued growth in the future.
Based on recent market statistics, the Realized Width Approach (RWA) sector currently boasts a market capitalization exceeding $6.9 billion and averages approximately $464 million in daily trading volume.
Market Impact
For several years following its 2017 debut, Centrifuge has offered liquidity to investors through CFG tokens. This has led to CFG being classified as a small-cap altcoin, with an estimated fully diluted market capitalization of approximately $211 million and a daily average trading volume of around $717,000.
During the current recovery phase of the cryptocurrency market after the crash on August 5th, the value of CFG has climbed more than 14% during the past week and is currently trading around 38 cents.
1. Launching the new lending platform by Centrifuge Protocol is expected to boost the use of CFG tokens considerably. Additionally, institutional investors looking for easy, blockchain-based lending and borrowing solutions can easily access the Centrifuge lending market.
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2024-08-27 14:15