Let’s dismantle the existing financial infrastructure, strip it down, and reassemble it for the 21st century. Today we launch Centrifuge: the Decentralized Asset Financing Protocol.

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Decentralized Finance (DeFi) leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.

When we started building Centrifuge in early 2018, the term DeFi didn’t exist. We were excited to bring Trade Finance into Ethereum and knew that in doing so we would open cryptocurrencies and blockchains to a new audience. Since then, DeFi has turned into the fastest-growing segment in crypto. …


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Centrifuge’s contribution to DeFi is to provide loans to businesses around the world. For DeFi to replace our traditional financial system we need to build access to capital for businesses to grow. Gustav from the Maker Foundation and I talked about one such use case in Paris at EthCC. If you’re unfamiliar with what Centrifuge does, I’d recommend you check out the talk. In light of recent events, I want to highlight ways that we believe assets with low correlation to the current collateral pool (ETH & BAT) can stabilize the system as a whole.

What happened on Black Thursday?

Within 24 hours Ethereum crashed from around $200 to slightly above $110. This flash crash would have certainly tripped a circuit breaker several times on the NYSE. For DeFi this led to a huge increase in trading activity and lots of people scrambling to close their leveraged positions on lending protocols such as Compound, DyDx, and Maker. …


This article is the first of a series explaining in depth our upcoming release of Tinlake and how it fits into the DeFi ecosystem on Ethereum.

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Today we dive into a feature of the Tinlake smart contracts to showcase how lenders can invest in Tinlake loans.

Tinlake is Centrifuge’s smart contract framework for bundling loans collateralized by NFTs. It allows investors to invest in these portfolios of loans by issuing and selling ERC20 tokens that represent a claim on value generated by the loan portfolios through interest accumulation, loan repayments and potential liquidations.

We’ve used Tinlake for a first set of transactions to finance — among others — music royalty payments and real estate with Maker. Using the Tinlake smart contracts, Lendflo is factoring SME receivables in the UK to bring transparency to borrowers and build a worldwide network of buyer-supplier relationships you can trust.

Some people have a different appetite for risk: senior/junior tranches in structured finance

Investors often want different kinds of risk exposure and yield on the same asset class. In the traditional finance world one way to achieve this is by using structured finance products and introducing a two tiered investment structure. Investors can invest in two classes of shares where one is a high risk but high yield class. The second class of shares has a lower yield but is protected from losses by the first class of shares. In finance this is usually called an A/B tranche or junior/senior tranche structure. …


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The period following the release of Tinlake has seen an overwhelming growth -in and around- Centrifuge. We started a close collaboration with the Maker Foundation in anticipation of Multi Collateral Dai launching on November 18th, simulating a reality where tokenized real-world assets will be used as collateral to take out loans in Dai. These successful projects have seen USD 250K worth of loans extended, which you can read more about on our blog.

In parallel, the time was ripe to add additional fuel to our growth. Fuel that would allow us to expand the team and support our growing number of partnerships, within the DeFi community, but also, importantly, beyond crypto and into the world of assets providers in need of liquidity and traditional capital providers and funders. …


Scaling Open Finance beyond Crypto

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The last few days have seen a lively debate around the risks and benefits of including diversified real-world assets in Maker’s Multi Collateral Dai (MCD) when it launches. At the core of the debate is the question of whether assets that depend on the legal system for custody and security should be included as collateral in a decentralized system.


We’re working on major improvements in how we can provide privacy to users of our NFTs. The work described here is the result of a collaboration with Stefan Deml, contributor to the zokrates-pycrypto library and the ZoKrates project. Together, we worked on a proof of concept for building a tightly integrated zero-knowledge proof using the ZoKrates language and toolchain. It was presented in the “ZoKrates: zkSNARKs for Developers” workshop at Zcon1, June 2019 in Split, Croatia.

This is a rather technical article assuming some knowledge of how zero-knowledge proofs work. If you are unfamiliar with zkSNARKs, I highly recommend reading this blog post.

Background

At Centrifuge, we have strong privacy requirements. We set out to build our protocol to rely on messages exchanged off-chain instead of using a completely public global ledger. While it comes with its own downsides, this allows for transactions across the Centrifuge network to be done completely hidden from any third party. In order to interact with the ecosystem on Ethereum, we allow for assets (such as invoices or purchase orders) to be tokenized and minted as a Non-Fungible Token (NFT). The non-fungible token standard, ER721, is an easy-to-use standard to track ownership and transfer it on Ethereum. Information about the off-chain transactions is provided to an NFT Registry to verify a given set of rules when minting an NFT. For example, when minting an NFT on Centrifuge, you would provide a proof that you are the supplier on an invoice. This exposes the information publicly which is not always desired. …


TL-DR: I want to give you a brief preview of a new product we’re launching called Tinlake, a platform built on decentralized financial infrastructure, that enables you to draw loans against conventional illiquid assets. This is done by issuing an ERC-20 token that represents a fraction of the collateral.

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The Direct Path to DeFi

Decentralized finance, in its mission to transform the global financial landscape, brings transparency, cost-efficiency, speed, and accessibility to an industry that has traditionally been opaque with tough barriers of entry.

At Centrifuge, we’ve spent the last year developing the underlying protocol that will connect the global financial supply chain, allowing businesses worldwide to connect and transact on a single source of truth, solving a number of huge structural problems in international supply chains. As our CEO Maex recently highlighted at CogX in London, the nirvana of B2B is getting paid on time, and we’re in the business of facilitating this early payment bridge, for any company of any size, around the world. …


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TL-DR; We published the Centrifuge Protocol Paper, a technical deep dive that walks you through the inner workings of Centrifuge OS. Read it here

Protocol + Paper

The Centrifuge Protocol Paper serves as a reference for the core protocol, and the rules that must be adhered to by any node in the Centrifuge peer-to-peer network. These rules include message specification, signature generation, and validation, as well as how the Ethereum-based smart contracts fit into the picture. …


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Photo by Daniel Abadia

Centrifuge is an open, decentralized network to connect the global financial supply chain. It allows any business, no matter how big or small, to transact on a global scale while maintaining ownership of their data, including their validated company details, their reputation, business relationships, and subsequent transactions. Centrifuge consists of a peer-to-peer network for decentralized data exchange, combined with a set of smart contracts on Ethereum for document notarization, maintenance of corporate identity, and the ability for Dapps to interact with documents in the form of non-­fungible tokens (NFTs).

We set out on our mission to change the rules of global trade beginning of 2018. Since then, we refined our thoughts on how businesses interact in an open and decentralized ecosystem in our whitepaper and worked with partners on different use-cases. But most importantly, we have been working very hard at the first version of the technical underpinnings of Centrifuge. Today, we are releasing the source code for our Centrifuge Node implementation (written in Go) and our smart contracts that power this P2P network in a release codenamed Russian Hill. …


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Somewhere on the internet there is a site with fictional characters for each crypto currency… Why am I surprised… Google Translate tells me she’s a school girl and can make private payments using zkSNARKs. — https://crypto-currency-girls.com/zcash/

I’d argue that Zero Knowledge Proofs are some of the most exciting developments in cryptography since private/public key encryption but they have yet to take off. However I also believe that privacy enabling technologies are a major missing feature that most blockchains are lacking, something which can be done with zero knowledge proofs. Without privacy, cryptocurrencies can’t (and shouldn’t) succeed. Zcash has for a long time had a very special place in my heart because of that. They’ve managed to bring zkSNARKs to the masses and built a cryptocurrency with working privacy. Zcash won’t be the only blockchain using zero knowledge proofs to enable privacy, but they are definitely the first. …

About

Lucas Vogelsang

Cofounder at @centrifuge

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