Centrifuge Launches Innovative Lending Market on Base Using U.S. Treasury-Backed Tokens

Centrifuge Launches Innovative Lending Market on Base

Centrifuge, an innovative startup focused on integrating blockchain technology with real-world assets (RWAs), has recently unveiled a sophisticated lending market that leverages collateral from various U.S. Treasury-backed tokens. This new market employs the advanced lending infrastructure provided by Morpho’s system of vaults, designed specifically for institutional clients.

The lending platform will operate on Base, the Ethereum layer-2 network developed by the prominent crypto exchange Coinbase. This platform will enable the collateralization and borrowing against several Centrifuge-affiliated assets, including the Anemoy Liquid Treasury Fund (LTF), Midas Short Term U.S. Treasuries (mTBILL), and Hashnote’s U.S. Yield Coin (USYC). The migration of real-world assets, particularly traditional financial instruments like tokenized Treasury bills, onto blockchain networks has emerged as a significant trend within the cryptocurrency space, and Centrifuge has been at the forefront of this evolution since 2017.

Reflecting on the past, Lucas Vogelsang, co-founder of Centrifuge, noted the initial challenges faced when the company was experimenting with RWA markets on the DeFi platform Aave. At that time, the liquidity of these tokenized assets was notably low. However, with the recent surge in the popularity of short-term assets such as Treasury bills, the viability of lending applications has significantly improved. Vogelsang remarked, “This RWA market with Morpho aims to give these tokens utility. If you hold a Treasury bill and require a bit of USDC for a few hours, days, or whatever the case may be, you can access that liquidity instantly without the cumbersome process of redeeming it, waiting for the issuer to return your funds, and possibly incurring fees.”

Circle-issued USDC stands as the second-largest stablecoin by market capitalization, further highlighting the importance of this development.

This collaboration marks a pivotal moment as it is the first instance of a permissioned lending market utilizing Coinbase Verifications. This feature allows Coinbase customers to self-attest that they have undergone Know Your Customer (KYC) verification via the Ethereum Attestation Standard.

The Morpho Vaults will be curated by Steakhouse Financial and Re7 Labs, as stated in a recent press release. This initiative promises to enhance the liquidity and utility of RWAs in the blockchain ecosystem, paving the way for more institutional engagement in decentralized finance.