Centrifuge: Building an RWA Lending Market on Base to Expand DeFi to Institutions

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The collapse of high-yield speculative DeFi platforms between 2022 and 2023 sent shockwaves through the crypto market, ushering in a prolonged bear cycle. Amid growing uncertainty, investors and protocols began seeking stability by turning to traditional asset classes—particularly U.S. Treasury bonds and private credit—sparking renewed interest in real-world assets (RWA) within decentralized finance.

RWA projects bridge blockchain with tangible economic value, anchoring digital tokens to physical or financial assets such as real estate, invoices, or government debt. This integration enhances the stability of DeFi systems while offering traditional finance (TradFi) institutions new pathways to improve liquidity and reduce transaction costs—without relying on legacy intermediaries.

Yet, despite their long-term promise, RWA protocols cooled during the recent crypto bull run, as yield-chasing degens flocked back to native DeFi opportunities offering double-digit returns. The tide began shifting again when BlackRock launched BUIDL, its first tokenized fund on a public blockchain, reigniting institutional enthusiasm and capital inflow into the RWA sector.

Ondo Finance led a broad rally across RWA tokens, but one project stood out: Centrifuge, which raised $15 million in a highly competitive funding environment. Given that most large investments lately have favored infrastructure plays, this A-round—co-led by ParaFi Capital and Greenfield, with participation from Circle Ventures, IOSG Ventures, Arrington Capital, Spartan Group, and Wintermute Ventures—signals strong confidence in Centrifuge’s vision.

Early Mover in the RWA Space

Launched in 2017 and pivoting to RWA in 2021, Centrifuge is among the earliest DeFi protocols dedicated to integrating real-world assets into decentralized ecosystems. Its key advantage lies in deep partnerships with top-tier DeFi players like MakerDAO and Aave.

MakerDAO alone accounts for 80% of Centrifuge’s active loan volume, forming a powerful symbiotic relationship: Maker gains access to high-quality off-chain collateral, while Centrifuge receives robust liquidity to fuel growth. This flywheel effect enables efficient capital deployment against real-world credit assets.

👉 Discover how institutional-grade lending is reshaping DeFi’s future.

Beyond MakerDAO, Centrifuge has collaborated with Aave to launch dedicated RWA financing pools, expanding its reach and attracting new users from established platforms. At its core, Centrifuge functions as a decentralized credit ecosystem that allows small and medium enterprises (SMEs) to tokenize their assets—such as receivables or equipment—and use them as collateral for on-chain liquidity.

Understanding Real-World Asset Tokenization

Tokenization refers to the process of representing physical or financial assets digitally on a blockchain. While stablecoins like USDT and USDC are the most widely recognized examples—backed 1:1 by fiat reserves—the scope extends far beyond.

Assets commonly tokenized include:

According to The Block, the global tokenized asset market could reach $16 trillion by 2030**, driven by increasing institutional adoption. Already, platforms like Ondo Finance (OUSG), MatrixDock (STBT), Maple Finance, and Centrifuge are seeing rapid growth in total value locked (TVL). DEX trading volume for RWA tokens has also surged past **$2 billion, reflecting rising demand.

Centrifuge ranks as a founding member of the Tokenized Asset Alliance and leads the private credit segment with $280 million in active loans**—though it faces challenges, including over **$26 million in loans overdue by more than 90 days.

Building Institutional-Grade RWA Infrastructure

For DeFi to attract serious institutional capital, it must offer secure, compliant, and scalable infrastructure. That’s where Centrifuge Pools comes in—an initiative proposed by co-founder Lucas Vogelsang to build an institutional lending market on Base, Coinbase’s Layer 2 network.

This new framework integrates with Coinbase’s verification system and operates as an open-source settlement layer, enabling institutions to safely participate in RWA lending with instant liquidity and collateralized borrowing capabilities.

Centrifuge enables borrowers to access funding without banks or intermediaries, lowering capital costs for SMEs while providing DeFi investors with stable yields decoupled from crypto volatility. Crucially, the platform maintains compliance with regulatory standards through carefully structured legal entities.

Each asset pool uses a Special Purpose Vehicle (SPV)—a legally isolated entity that holds real-world collateral separately from operating companies. This structure mitigates bankruptcy risk and increases transparency for investors. Ownership of assets is formally transferred from originators to SPVs using proven legal frameworks from traditional asset-backed securitization.

The Centrifuge DAO oversees governance via several core groups:

👉 Learn how decentralized credit markets are unlocking new yield opportunities.

How Centrifuge Brings RWAs On-Chain

Centrifuge began by enabling businesses to share verified financial data—like invoices and supply chain records—on-chain. Over time, it evolved into a full-fledged RWA financing protocol.

Its initial solution, Tinlake, stored data on Ethereum and allowed users to create open credit pools backed by real assets. Borrowers could tokenize collateral and issue two types of tokens:

Investors choose based on their risk appetite.

Later, Centrifuge built its own Substrate-based blockchain, known as Centrifuge Chain, enhancing scalability and multi-chain compatibility. The newer Centrifuge App replaced Tinlake, streamlining KYC/KYB processes and allowing EVM-compatible chain users to participate seamlessly.

Assets are represented as NFTs containing critical metadata—valuation, repayment terms, pricing—used as collateral. While core data is public, sensitive information remains private via a secure off-chain data layer. Data hashes are anchored on-chain, creating verifiable links without exposing confidential details.

Managing Funds at Scale

As of now, Centrifuge hosts 19 pools with 37 token tranches and a TVL exceeding $289 million. To cater to professional investors, it launched Centrifuge Prime in June 2023—a curated RWA investment platform backed by financial experts and developers.

To boost liquidity, Centrifuge proposed allocating part of Aave’s treasury to low-risk RWA investments via Centrifuge Prime—a move aimed at scaling operations sustainably.

In March 2024, Centrifuge partnered with Anemoy, a blockchain-based asset manager, to launch a regulated fund management platform. An entity from the Celo ecosystem invested $100K in tokenized Treasuries via Anemoy, with another $1M earmarked for future deployment. Anemoy also integrated with Trident Trust, advancing efforts toward automated, compliant on-chain fund structures under BVI regulations.

The native CFG token powers governance and transaction fees on Centrifuge Chain. With 81% of CFG already circulating, the supply is largely decentralized, reducing potential sell pressure from early holders. However, the price has trended downward recently, sitting around $0.658 at the time of writing.

FAQ

Q: What makes Centrifuge different from other RWA protocols?
A: Centrifuge stands out due to its deep integration with major DeFi protocols like MakerDAO and Aave, its focus on SME financing, and its use of legally compliant SPV structures for risk isolation.

Q: How do investors earn yield on Centrifuge?
A: Investors provide liquidity to asset pools and receive DROP or TIN tokens. DROP offers fixed returns (lower risk), while TIN offers higher potential yields but absorbs first losses.

Q: Is Centrifuge regulated?
A: While decentralized, Centrifuge ensures compliance through SPVs governed by real-world legal frameworks and partnerships with regulated entities like Trident Trust.

Q: Can individuals invest in Centrifuge pools?
A: Yes, though some pools may require KYC/KYB verification depending on jurisdiction and asset type.

Q: What risks are associated with lending on Centrifuge?
A: Primary risks include borrower default (as seen in overdue loans) and exposure to macroeconomic factors affecting real-world assets like receivables or leases.

Q: Why did Centrifuge choose Base for its new lending market?
A: Base offers low-cost transactions, strong security via Ethereum L2, and direct integration with Coinbase—making it ideal for institutional adoption.

👉 See how next-gen DeFi platforms are merging real-world finance with blockchain innovation.

Founding Team & Funding History

Centrifuge was founded in 2017 by serial entrepreneurs Lucas Vogelsang, Maex Ament (who left in 2019), and Martin Quensel—veterans of the fintech space who previously co-founded Taulia, a supply chain finance platform serving Fortune 2000 companies.

Their experience revealed persistent gaps in SME financing—high fees, reliance on banks, lack of transparent markets—which inspired them to build a decentralized alternative.

Today, the team spans 56 members across Berlin (engineering/product) and San Francisco (business development), combining expertise in blockchain, finance, and regulatory compliance.

Funding Timeline:

This consistent backing underscores investor confidence in Centrifuge’s mission: bridging DeFi with real-world finance in a secure, scalable way.

As institutional interest grows and tokenization matures, Centrifuge is well-positioned to lead the next wave of innovation—bringing trillions in off-chain value onto the blockchain.