Centrifuge, the bridge between traditional finance and the crypto world, represents an innovative decentralized finance protocol aimed at improving credit accessibility for small businesses.
Let’s see all the details below.
Summary
Centrifuge: the bridge between innovation and traditional finance in the crypto world
As anticipated, Centrifuge stands out as a blockchain designed to connect financial innovation to traditional finance.Â
The platform is led by CEO Lucas Vogelsang and founded by a German team.
In order to overcome traditional finance’s distrust of emerging technologies, Centrifuge is committed to providing a stable foundation for investment returns.
At the heart of the project is Tinlake, a decentralized application that serves as an authentic marketplace for real-world assets transformed into non-fungible tokens (NFTs).Â
These NFTs act as collateral for loans, simplifying access to liquidity pools.
Investors benefit by adopting traditional enterprise lending methodologies, achieving stable returns that counteract the volatility common to crypto markets.
Initially conceived as a proprietary blockchain, Centrifuge later adopted Ethereum‘s specifications and became compatible with Polkadot‘s parachains.Â
This strategic choice, combined with the development of NFT functionality and a marketplace, has enabled it to act as a bridge between the Ethereum Virtual Machine and the DOT ecosystem.
At the core of its operating system, the CFG token plays a key role, being used to pay transaction fees, participate in staking, and contribute to internal network decision-making processes.
Centrifuge and Tinlake: how they work and what are their advantages
Centrifuge is based on Parity Substrate, a platform that enables the creation of distributed blockchain systems on Polkadot and Kusama.
When operating as a parachain, Centrifuge interacts with Polkadot, leveraging the consensus and security protocols of the Relay Chain. In independent mode, however, Centrifuge Chain adopts the Proof-of-Stake consensus mechanism, facilitating transactions through the use of CFGs.
Centrifuge’s approach aims to support the many small businesses neglected by the traditional credit system, a phenomenon that persists despite lower default rates than large companies.
On Tinlake, businesses, called asset originators, can tokenize various types of real assets, such as mortgages and invoices.
The transformation of documents into tokens enables authenticity and ownership verification on the blockchain, making NFTs usable as collateral for loans. These loans become possible by depositing liquidity into pools on Tinlake.
Liquidity providers commit stablecoins to the pools, earning a return from asset originators.
The traditional credit assessment approach is replaced by an analysis focused on the quality of the financing applicant asset, bringing innovation to the lending process.
Centrifuge: a solid prospectus for the future of decentralized finance
In conclusion, we see Centrifuge emerging as a promising player in the field of Decentralized Finance (DeFi), an area considered the future of financial markets.
Its vision of serving as a bridge between real-world businesses and traditional finance, harnessing the power of blockchain, gives the protocol important relevance.
The significant interest already generated by Centrifuge is evidenced by the funding raised, which exceeds $12 million in five rounds.
These funds are intended to support the development of the project, paving the way for significant growth and the achievement of new milestones.
Centrifuge’s reliability emerges from its ability to attract substantial funding and clear vision to bridge the gap between real businesses and decentralized financial opportunities.
With the solid financial foundation, Centrifuge seems well positioned to make the quantum leap to play a major role in DeFi’s future.
