Centrifuge partners with USD//Coin
Enabling frictionless Supply Chain Finance for the masses with on-chain real-time payments
We are excited to share that Centrifuge is getting another step closer to mass adoption of crypto payments in the financial supply chain. Partnering with USD//Coin (USDC), the governed stable coin protocol powered by price stable crypto assets, gives businesses instant access to seamless and affordable funding.
TL;DR: Every business around the globe is in need of financing in one way or the other. Financing for outstanding, unpaid invoices could play a more important role if delivered simple, fast and accessible for everyone. The Blockchain is an ideal structure to use for this, as it allows for the trustless and instant transfer of funds. However, a stable and reliable form of payment is necessary. Centrifuge is developing a way of turning business documents into NFTs (Non-Fungible Tokens), which by their nature, can then become assignable and tradeable. From today on the Circle and CENTRE open source consortium provides a reliable on-chain payment method, that is a requisite for businesses, by introducing a standard for fiat-denominated stablecoins. USDC can now be sold and sent on Circle Trade and Circle’s exchange Poloniex.
Mass adoption at our fingertips
At Centrifuge, we believe in the “inside out adoption” pattern of blockchain technology (as described by Chris Dixon in his recent interview on Unchained). The Ethereum ecosystem already provides many building blocks — Dixon calls them lego bricks — developed by and for the crypto community. Naturally, adoption starts within crypto savvy circles which as of now still is a very confined and small community. In order to bring the technology from the inside of these circles out to a diverse range of (business) stakeholders, however, it only takes a few steps.
Within the financial supply chain, for instance, it is very common for companies to borrow money to bridge the time between invoicing a customer and receiving the actual payment. Depending on the company, and its location within a supply chain, payment cycles vary from 30 days to 120 days, which is a long time to wait for a payment. Traditionally, companies can access financing for outstanding, unpaid invoices in various forms. These typically involve a centralized financing entity (e.g. factoring provider) combined with the promise of repayment of this early payment. In many forms of invoice financing, a “debt” is passed around to provide early liquidity with later repayment of the debt. Thanks to blockchain technology we can increase transparency into the pricing of a funding offer and enable funding providers to tap into a larger pool of assets. We can address the funding-seekers’ need to access liquidity as quickly as possible with a high certainty of early payment to a desirable fee.
Currently, the majority of crypto loan offerings are problematic for companies that work with repayment cycles of 60, 90, 120 days. Let’s Imagine you took out a loan denominated in ETH at a time where the ETH value was low. During your loan period, the value of ETH increases substantially and you end up repaying more than you originally took out. Thus, these types of loans largely remain interesting for crypto native day traders but unattractive to companies in need of working capital.
However, if you assemble the blockchain lego bricks the right way, crypto loans do have the potential to be very attractive to businesses. For instance, combining the lending platforms that are currently being built on Ethereum with a stablecoin — a crypto asset that is pegged to e.g. the USD — suddenly these platforms turn into USD lending platforms and become reliable and stable liquidity providers. For Centrifuge, USDC represents such an important lego brick which brings us closer to unlocking the potential of decentralized financing businesses and thus mass adoption for crypto B2B payments. We are excited to team up with USDC and make crypto loans business ready!
“For the participants of the financial supply chain, corporates, and SMEs, to adopt Centrifuge OS, a stable and reliable way of getting paid is crucial and necessary. We believe that CENTRE’s stable coin standard is an excellent means to achieve that. Issuing USDC, Circle would not only enable cross-border and cross-currency payments but would also bridge the on- and off-chain world of payments. For business adoption at scale, crypto payments need to become as simple as that.” — Maex Ament, CEO and Co-Founder at Centrifuge
The Circle and the CENTRE open source consortium is introducing a standard for price-stable crypto assets — enabling the issuance of stablecoins such as the USDC which is pegged to the USD (fiat-denominated stablecoins to follow). Individuals and institutions can enroll in this service to deposit US dollars from bank accounts, convert those dollars into tokens usable everywhere the internet reaches (subject to the token’s compliance controls), and redeem USDC tokens and cash out to bank accounts. More information on USDC here.
Centrifuge is an open, decentralized operating system to connect the global financial supply chain. It allows any business, no matter how big, to transact on a global network while maintaining ownership of their data, including their validated company details, their reputation, business relationships, and subsequent transactions. The Centrifuge protocol optimizes processes in the areas of accounting, invoice processing, logistics and supply chain financing, but to name a few. Third parties can develop decentralized and centralized apps based on the Centrifuge protocol and thus provide additional services for the ecosystem. The company with offices in Berlin and San Francisco was founded in 2017 by Maex Ament, Martin Quensel, and Philip Stehlik, who have already successfully built three companies (including Taulia) in the areas of enterprise software and supply chain financing.
Written in collaboration with Lea Schmitt