Tokenization Pioneer Centrifuge Unveils Lending Market With Morpho, Coinbase

As a seasoned crypto investor with over a decade of experience under my belt, I find the recent development by Centrifuge and their partners extremely promising. Having witnessed the struggles of liquidity in the realm of real-world asset (RWA) markets in the past, it’s refreshing to see a solution that provides instant access without the need for redemption.

A company called Centrifuge, which focuses on creating blockchain tokens that represent tangible real-world assets, has set up a lending platform. This platform uses as collateral various tokens backed by the U.S. Treasury, with the help of Morpho’s safekeeping system for these assets.

This market, designed for institutions, will be located on Base, an Ethereum layer-2 network created by crypto exchange Coinbase. It provides the opportunity to secure assets and borrow funds using the Anemoy Liquid Treasury Fund linked with Centrifuge, Midas Short Term U.S. Treasuries, and Hashnote’s U.S. Yield Coin.

Translating real-life assets, especially conventional financial items like tokenized Treasury bills, onto blockchain platforms is currently a popular move within the cryptocurrency world. Since 2017, Centrifuge has been dedicating its efforts to this specific field.

Looking back a few years, when Centrifuge was testing RWA markets within the DeFi platform Aave, liquidity for the tokenized assets was scarce, as noted by Lucas Vogelsang, co-founder of Centrifuge. However, today, short-term assets such as Treasury bills significantly improve the viability of lending cases, and the market has experienced significant growth.

“In an interview, Vogelsang stated that the RWA market in partnership with Morpho intends to provide these tokens with practical uses. This means that if you have a Treasury bill and require USDC for a short period, say hours or days, you can easily access it without going through the complex process of redeeming it, waiting for issuers to return dollars, and potentially paying fees. In essence, this offers instant liquidity without needing to actually redeem the asset you’re borrowing against.”

Circle-issued USDC is the second-largest stablecoin by market cap.

This partnership represents the initial instance where a regulated peer-to-peer lending platform employs Coinbase’s verification process. With this, a Coinbase user can independently affirm that they have undergone Know Your Customer (KYC) checks by Coinbase, in accordance with the Ethereum Attestation Standard.

According to a recent press announcement, the management and care of the Morpho Vaults has been assigned to both Steakhouse Financial and Re7 Labs.