Centrifuge - ELI5

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Hello everyone,

I try to understand the ecosystem but Centrifuge has so many layers. I think we need an ELI5 for starters like me.

I’ll probably miss some stuff here or maybe make some mistakes but I’ll give it a try. With your contributions we can make it complete imho.

ELI5 on Centrifuge:

  • Centrifuge helps bringing real world assets to decentralized finance. How?

  • With two products: Tinlake and Chain

  • Chain or Centrifuge Chain is the gateway for real world assets. Businesses or asset originators tokenize the said real world assets on Chain. Now what?

  • Now, Tinlake comes in. Tokens on Chain are transferrable to Tinlake via brigde.

  • Tinlake’s set of smart contracts let asset originators pool their said tokens (NFTs) and borrow stablecoins in return. This lets businesses to reach the liquidity of DeFi. Who gives them stablecoins?

  • Investors. Investors can come and lend their stablecoins. But why?

  • For interest bearing tokens namely TIN and DROP. Both tokens accrues interest over time.

  • TIN is a risky one that takes the risk of default but it receives a higher return. While DROP is protected against defaults by the TIN token and receives stable (but usually lower) returns.

  • Lastly, RAD (Radial Token) is the token that powers Centrifuge.

  • RAD provides the framework needed to run the platform without reliance on a single point of failure, including the Centrifuge team or company, and to accelerate its utility.

  • It is more than a network token but since this is an ELI5 I’ll not get into that: For more info on RAD

  • Pools on Tinlake now receives RAD rewards. I think that’s all most of you need to know anyways :slight_smile:

That’s all. I hope I managed to keep it simple and avoided mistakes. If not, please correct me.

Thanks all!

8 Likes
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Great eli5 :slight_smile: I think this will help people get a basic understanding of how Centrifuge system works

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thanks, that’s the goal! :slight_smile:

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Cool stuff. Also I would like to know if centrifuge will be a parachain on polkadot or kusama network ? I believe polkadot but I couldn’t find the answer yet… auctions for a spot on polkadot chain are on jan 11. However, kusama is the canary network for polkadot so a few good projects will go on kusama first.

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Update: NOT on Polkadot parachain auction.

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What does that mean? Is there another way, apart from auciton, to get allocated a parachain spot?

And what if centrifuge doesn’t ever get a spot? Would it access Polka ecosystem via another (accepted) parachain?

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yes probably on kusama parachain but you could ask @lucasvo

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nice and clear , plain and simple !

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