How Centrifuge is bringing real world assets onto blockchain

0:01I'm ashon Addison from the cryptocoin show and today on blockchain interviews we have drone offerings the CTO of centrifuge here to talk about onchain bringing everything onchain real world assets tokenization uh the ethereum ecosystem and much much more drone welcome to the show and thanks for taking the time yeah thanks so much for having me really glad to be here very welcome you

0:25know I actually have been following centrifuge for many years I know it's you it's not a new project and your team's been working hard I would love to sort of get a high level for those who have made maybe have seen centrifuge around but they don't know exactly the intricacies and what you've been up to more recently if you could give a high level on uh the platform and uh what

0:47your focus is on then we can dive into all the details after that yeah absolutely I mean yeah you're right uh C has been around for quite a while we uh kind of co-founded in almost seven years ago uh we went live on ethereum inet in 2019 uh everybody who's been around since then knows that crypto has changed radically since then uh what we started focusing on early on is

1:10bringing real world assets into defi back in 2019 2020 that was a pretty crazy idea and we're one of the if not the first ones doing this uh and really back then rbas were not the termin anybody was talking about uh we're in a very different market now I would say and positively so um so what we're focused on today is being is building a onchain uh tokenization and asset

1:30management protocol um what that means is right by tokenization I think you're pretty familiar with this it means taking off chain real world assets bringing those onto a blockchain and then using blockchain for everything that uh it's built for which is uh utility and Defi and so on uh and then the other part that we're really focused on is not just create taking something

1:48that's off chain and putting it on chain but actually really trying to streamline and bring the entire process of running a fund and managing assets directly on train uh so really building all the smart contracts and all the um plugs needed um to transform the financial system um Beyond just launching a new years it's yeah no it's crazy that you guys were

2:10way farther ahead than than Black Rock uh in their tokenization of real world assets you saw that coming um how has that you know the the vision and then the practicality of actually doing it shifted throughout the years of getting into real world asset tokenization sort of when it was very very early on and now where it's as it's more maturing has that shifted a lot through in

2:37centrifuge yeah 100% I mean early on right like 2020 2021 what we were focused on and like the discussions we had with every D5 partner and anyone that we're working with was how do Ru assets compare to defi assets right like how do you compare all of these assets that exist in the traditional world with um going long e or going long crypto or Bitcoin or anything like that um and so

3:01what we try to focus on is bringing new assets that really brought um different kind of risks different kind of yields to the defal ecosystem um now we're in a very different time uh we have indeed black for being the best example of huge institution participating on blockchain directly launching their o token using defi I think that's been a great step

3:22for the market uh I think we're very happy to see that uh and I think overall I think uh we start to see this big shift from institutions saying look we want to work with this we're interested in it let's do a small PC maybe let's launch a private blockchain to now we're in a moment where everybody saying well we're want to launch a token yesterday we want to launch a stable coin today

3:43right like they're all ready they're all trying to participate um and that's amazing like we're working with a big institutional partner called Jens Henderson which is a huge SM manager managing 400 billion 400 billion as well um it's been incredible to see how quickly they're able to move and adopt his new CES because they realize this is inevitable at this point I think that's

4:04the driver that's that wasn't the case two years ago even yeah it's crazy to see and it's great for blockchain uh in the industry to see Enterprises coming in and major institutions and they don't need you know two years of let's figure this out early on they feel like they're at that point where they need to catch up they're like we see this is this is

4:26the future we need to tokenize something let's get it done today or this week which is great for you know guys like people in centrifuge that have been working on this technology for years all of a sudden now the market is caught up to it okay people want this and there's a high demand for it 100% I completely agree and I think what's interesting as well is all of

4:48these institutions what they recognize is there is this broad set of experience and expertise that already exists in defi from defi protocols like Mora and AA maker to the existing tokenization protocols like to some others what they see is right what they tend to do is rather than try to build everything themselves which they also realize it's a very different game that building

5:08interational Finance um most of them are actually converging on partnering with to technology providers already exist I think that's really a win-win uh it means that you can combine the uh Divi knowhow and techology strength of partner like C with the experience that an institution like this brings uh and I think that really gets us the best results yeah

5:30I'm looking forward to more institutions getting into web 3 realizing it's the future I think we've known it for quite a few years um but it's great to see everyone else catching up and now being the CTO at centrifuge which is focusing on the technology can you talk a little bit about the underlying technology the blockchain infrastructure you know is it

5:52all ethereum are there other chains what works best for rwa yeah absolutely I mean so we're a big transition right now we have a c 33 launching launch coming up uh in the next few months uh and where we're going with that is becoming a fully multi-chain evm protocol um what that means is we're how we see the market developing is we do see most of the

6:16liquidity mostly use cases for rbas on different EVN based blockchains today uh I think there's a lot of exciting stuff on other l1s as well but 80 90% is still on the evm and then you start to see that it's really not just on ethereum inet anymore very much on base and arbitrum and avun all those of networks uh and so our strategy is really building an open protocol that uh our

6:39partners the asset managers institutions can use to tokenize and manage the assets on all these different networks and then one specific thing that we're really focused on is actually um basically building the first chain abstraction protocol for tokenization what I mean by that is right if you're a big institution um with uh strong kind of SM management background um but not

7:01necessarily the crypto know how you really don't want to be interacting with 10 different blockchains using 10 different custodian setups managing gas tokens are r i mean even as crypto dents know the the issues with that um so what we're focused on is basically allowing them to use just one blockchain and manage liquidity from all the other blockchains from that single Hub I think

7:21that's a pretty big step in ultimately improving the user experience uh I think that is the other part right we all know that the US experience in crypto is something that uh has improved a lot over the last few years um but still we have a way to go and I think these kind of things uh really help to take it to the next level definitely uh I know sort

7:43of having that white glove or handholding experience even for a large institution I feel like it's necessary because I could see many Enterprises coming in and they they say we want tokenization we know about ethereum and then but they're like but there's like 20 other l2s on ethereum and and what about salana and polka dot and all these other ones where do I start you know I

8:06don't want to have to go through a four-year degree on which blockchain is best we want to get this tokenization done this week um so how do you explain that uh in in a way that it's like okay we got it uh and how big of a focus is interoperability at least between ethereum chains yeah I think I mean to the first part I think an approach that we taken

8:30which I think has really served as well it's very have C which is is a dow it's a decentralized protocol can be used by anyone it's fully open but then also we have an entity called enoy which is a entity in the ener ecal system it's basically a regulated uh service provider that uh helps institutions to use uh use the technology uh and I think that's where we kind of combine that

8:51decentralized technology and the openness with the surface that some of decision institution needs to start building into this space um so I think that's really surfed as well in terms of interoperability I think um it is essential that or this Market is not going to grow to many percentage points of GDP that we expected to um if we all have isolated blockchains it isolates s

9:15liquidity it is a hard loer I think it's been incredible to see over the last few years obiously one there's been a lot of improvements on kind of bridging and and the connectedness between the networks uh you still have I would say a lot of liquidity isolation um meaning for example um generally blockchain where circle is directly deployed with cctp is

9:37a lot easier to use if compared to if you're only like a V USC token and that's like a very specific technical issue but like you still see these issues that are not fully resolved I would say so I think this is still an ongoing part the other thing which maybe a slightly different angle Which is less about blockchains and more about inter interoperability uh with smart contracts

9:57is really how do this ba focused contracts work together uh how does a um how does a protocol that wants to aultimate investments in rbas actually buy different RBA tokens uh and this is something that we've really spent a lot of time and energy on which is one of the things we did is we co-authored this uh ERC standard called ERC 7540 um this is a nonchain investment

10:21standard specifically built for mostly rbas some other use cases as well uh it's an extension of e 4626 which is WID they adopted standards I think over 13 billion in tvl today um and it's really imagined to kind of take composability foras to the next level um and it's really exciting to see it's already adopted by quite a big part of the market um super form is using it which

10:45you might be familiar with plume which is not RBA player uh and then recently we'll talk about this as well I'm sure uh we're working with maker and Spark and they're going to use the standard as well I think that's a really big step for connecting all of these systems together yeah no I agree the more interoperability and compatibility within blockchain uh if we're going to

11:08grow to more percentage points of of the market and people are going to shift in it needs to all work with each other very fluidly so I think over the past years there's been a lot more interoperability especially as real world assets become tokenized being able to you know make sure there's no barriers to moving it to another Enterprise that maybe set it up on a

11:30different chain um you know it's that's going to slow down progress a lot um so I I'm glad that there's a focus on that and I'm curious about the actual types of assets that could be tokenized you know because the possibilities are almost endless you know you could tokenize Securities you tokenize Commodities real estate you know your car down the road there are some early

11:55adopters uh in the types of assets do you see a spe specific uh or any groups of assets that enterprises and institutions are coming and say this is what we want to tokenize or where do you see the market growing early on yeah I think I mean the first question you have to ask right like where is currently demand for these kind of Assets in defi uh and mostly what you

12:17see and what kind of Def protocols and uh foundations in Defi and so on are looking for is ultimately diversity from the volatility in crypto uh and what that means right is they want stable assets that give them a predictable yields um generally that today means fixed income and mostly us treasuries and T bills uh and that's where you've seen most of the growth in the RBA

12:38Market at the last year or two which is basally tokenized uh funds buying uh short-term treasuries um that's been a very simple use case I would say um but one that really serves the market very well today uh especially with all this growth in stable coin Market where all of the stable coins again what they need is stable collateral um that is very low

12:58risk and also very high liquidity so it's kind of a perfect use case for that I think what you'll start to see now is because the token T Market is starting to be quite saturated there's a lot of offerings you start to see diversity away from that I think the biggest next area in the short term is really um more fixed income across the risk return curve um so slightly higher yielding

13:19assets maybe a little bit more risk U but still pretty high liquidity so they still easily swapable to stable GRS uh I think that's going to be interesting uh I do think you'll start to see other more Equity like products um so tokenized index products I think is quite an interesting area that could really give users on chain the ability to I mean ultimately invest their

13:39Capital uh in a way that they can kind of grow it longer term um I think tokenizing individual assets like cars and real estate quite long term right like in reality um it's mostly a legal issue to actually have organization on chain you don't need enough chain legal structure uh and generally the the cost of that is not insignificant so it doesn't really make sense to do that on

14:02a Case by case basis for an individual car or individual mortgage uh so generally you do that for funds or kind of IND next prods um I hope that kind of Regulation will change in a way that that will be uh more accessible on 11% yeah no it's a great point and I could see how fixed income uh is if you're if you're an institution or Enterprise moving into a new industry that might be

14:27a little foreign you know the more ility and and fixed income the better uh and that's why I think stable coins are so important for defi maybe you could touch on that a little bit more and you know there's a lot of discussion around uh legislation coming in around stable coins as well and further adoption of Enterprises I think that's the first thing you know maybe even more than

14:49Bitcoin uh in that they're like we need to make sure that we have stability if we're going on chain let's make sure that we have the right stable coins in defi if we're going to do RW way yeah I mean a th% agreed I think sa coins are one of the main products in defi today that really found product Market fit uh there's several like very clear use cases from like cross B

15:14payments to ultimately just giving yields to Holders of uh USD um to using those C coins in def5 for other use cases for leveraging on so um I think you've seen an incredible amount of growth and I think a lot of that is also um we have stronger collateral onchain now right like most of these stable coins if you think about just maker and usds um they're number one collateral

15:38today uh is actually thres bills um and so I think having that stability is a big part uh on why they're able to grow safely um so it's really I would say stable coins and RBA is still very much yeah and with more interest in defi you know there's always been an early interest from the crypto degens and people that have just been looking for different yields and the smart one's

16:02also looking for stable stable yields as well um it is what is the access like on centrifuge you know you're working with these Enterprises and institutions but what about people like everyday Traders or just investors can they go and um just go to the open market and be like hey you know this Enterprise has this available and I can just play with it

16:25myself without really being involved yeah it's great question so I think this is something we're really really focused on and trying to improve uh where we are today right like most of these uh cized offerings are securities uh and there's quite a significant onboarding process but what's really interesting right is you can reuse these products within D5 so one of the

16:45examples I mentioned uh maker already if you buy savings uh well usds or savings die today the yields you're getting is ultimately RBA yield and a quite big part of it is actually send uh tokenized product yield kind of collateral within maker um so there is a way to get exposure to rase but it's mostly for other def5 protocols another example is we have a big partnership with Moro uh

17:09and there's a steakhouse rd7 uh volts curated by them uh that ultimately are buying the same rbas for those things I think what a really interesting use case um you don't need to do full QC you only need to have a basically coinbase account and because you have a coinbase account the issuers can basically trust that you're not from the US and Europe

17:28not a black able to accept those Investments I think that's really exciting it also technically works really well together like it's all base um so it's pretty seamless ux U so I think those are already the big steps um we're also have an exciting kind of announcement coming on this front from oursite where um we're going to have a new product that will be much more accessible to um a

17:51retail audience um but that will be announ the next few months that's exciting I I'll be following along there for sure and you know since the Trump Administration has come in it's been um two months or so a lot has happened in crypto um he said a lot and there's been huge advancements in strategic Bitcoin Reserve but I feel like that's just the tip of the iceberg and that eventually

18:14is going to trickle down into more stable coin legislation more of the traditional Financial world uh in in the US which is the number one Financial Market in the world moving into uh to web 3 and and rwa more which is probably good for centrifuge um how do you see that plan playing out I think a lot of people thought you know we're going to flip a switch and on day one you know

18:39we're going to the moon and and everyone in traditional Finance is going to start onboarding into web 3 and of course it takes time but there is that more urgent demand than before but how do you see that playing out as uh legislation comes out versus just interest uh as institutions in the US potentially wake up to the fact that there's all this other stuff going on with Bitcoin they

19:04should probably just get into web 3 in general yeah I mean I was saying earlier in a call that um I've been positively surprised by how quickly these institutions are able to move but we still need to acknowledge that actually moving over the entire Financial system to new blockchain rails is not an easy task and I think what's happened in the US and the uh work

19:25that's been happening there is incredibly exciting I think so many positive movements the fact that there really actual usage of def5 protocols on ethereum and Solana launching stable coin is the most recent Announcement by the world Liberty Foundation these are great uh steps to ultimately legitimize crypto legitimize blockchain Technologies for the

19:46institutions because what's most important right is that institutions get comfortable using and building their business on top of these Technologies um and that takes time it means both adoption and kind of the Border Market moving and that's I think this is so positive but it also means regulatory Clarity right ultimately um right now I mean I don't even know how much we spent

20:07in the last seven years on legal cost and really most of that is going to the fact that um so far a lot of these uh lines and what can be done and what cannot be done it's been really in a gray area and it's been hard to figure out what is possible and what is not possible um we've always been very strict in terms of adhering to the right laws and regulations and and rules that

20:28exist um but that takes a lot of time and a lot of investment and it's not very accessible to the average kind of startup um so getting more clarity getting more black and white what is possible and ultimately opening up the market right like creating better rules for stable coins better rules for decentralized particles that's all essential uh and I think it seems like

20:46there's a lot of good movement in that direction so that's great to see yeah it is really great to see and with all these updates happening what is potentially in the road map for centrifuge for this summer and moving into Q3 2025 what's the main focus on rolling out uh other parts of the platform and obviously onboarding more institutions yeah um so I mean the

21:12biggest product launch for us is really the new V3 product uh that's going to go live on several evm blockchains on day one in the next few months uh and that's really going to bring the next set of use cases for rbas and I think it's going to enable a lot of the institutions to do much more on chain that they've been able to do in the really excited about what we're going to

21:30be able to do with that beyond that I think what's really big is um last week uh maker Sky announced the winners of their grand prix this was basically a a huge RFP of $1 billion for allocating to arba protocols uh and they decided to allocate three parties uh Black Rock superstate and us and so we're going to get um basically 200 million TVR commitment from spark uh in with them

21:57buying toiz uh t um that's an amazing step for the markets they're really the biggest buyer of RB on chain today but it's also an amazing partnership uh I think we're going to be able to go much further together with them um they're buying entirely tokenized offerings which is great uh and I think there's a lot that we can do with them wow that's really

22:17exciting and that's great company to be and I'm looking forward to seeing those updates uh over the next couple months and I think the market overall and and hopefully Trump's Administration is going to keep pushing in that direction that's it's probably going to help centrifuge and and web 3 overall so we'll see if the US really does become the crypto capital of the world or all

22:38the whole world just catches up uh would be great too uh so what what is the best way to follow along with those updates uh that are coming out and then also just to test out centrifuge and follow along with anything else yeah you can uh follow us on X or Twitter uh so it's at Cent uh is where we are uh I think we going to share all the updates related to what we're doing

23:01there you can also go to app doc.io which is our main UI where you can see all of the products that we have today and all of the growth and I think that's going to be a great way to kind of get started sounds great I appreciate your insights into real world assets uh wishing you and the team all the best on on the defi side of rwa and tokenization thank you for bringing more institutions

23:22into crypto um which is for sure the future now um and we'll see uh I think t bills and fixed income is a great start for uh real world asset tokenization and I'm expecting eventually the entire US Financial system to be onchain and faster cheaper Global and uh and the future so um appreciate your your insights into it and uh the

23:50contributions that centrifuse has made to making that possible yeah thanks so much for having me it was a great discussion and I think we're all excited for that future I think it's getting closer don't we think