TL;DR Centrifuge is releasing a first iteration of a community-governed process for financing RWAs through the Centrifuge protocol.
Centrifuge is decentralizing the process of onboarding RWAs into DeFi through a process we’ve dubbed the Pool Onboarding Proposal process, simply to be known going forward as…
The process will live on the Centrifuge Forum and be governed by the Centrifuge community to ensure that RWAs are proposed, assessed, and onboarded in a predictable, transparent, and public process allowing investors to finance the world’s debt through the Centrifuge protocol.
Let’s take a moment to review why the POP was created, what it could achieve, and how it will begin.
Centrifuge from its beginnings has chartered a course to become a DAO. As a DAO, it’s essential that the Centrifuge community (and broader ecosystem) engage and govern around the future of the protocol. As Centrifuge is the home for RWAs in DeFi, providing the community the opportunity to discuss and contribute to the collateral that is financed through the protocol is fundamental.
Since Centrifuge first launched Tinlake in October 2020, the core team has witnessed billions of dollars in RWAs seeking to access DeFi capital through the protocol. These RWAs have come from a wide range of geographies, industries, and counterparties, and they’re looking to Centrifuge’s infrastructure to finance RWAs on-chain.
The core team is no longer capable of handling that growing demand, the community is not able to engage with these groups, and investors are not able to qualify these potential investment opportunities.
It has been the vision all along to decentralize the onboarding process to the community and that time is now. The Centrifuge community and broader credit ecosystem (both in DeFi and TradFi) will now be able to meaningfully engage with all the inbound interest from RWAs seeking to finance debt on on-chain.
The time is now to decentralize the process of evaluating and onboarding RWAs to Centrifuge through the POP, allowing for greater transparency and improved speed via governance driven through the community. This is a process that allows the protocol to scale, in a safe and trusted manner, while also allowing for future adjustments and updates to improve the process for all participants.
Conservatively speaking, at least $1 billion in inbound asset financing demand has approached Centrifuge in the past 12 months. This has come through referrals, social media, investor introduction, our website, our community, and anywhere else you can imagine. And it’s only growing.
The protocol is approaching $100M million in TVL, yet TradFi debt markets are greater than $100 trillion (source).
Centrifuge is only financing 0.000001% of the world’s debt.
It’s clear the market is massive, momentum is moving on-chain, and Centrifuge protocol could one day finance the world’s debt on-chain.
The POP will bring awareness and transparency to the process of financing RWAs through the Centrifuge protocol.
It is designed to empower any organization to self-manage their journey, gain insight and input along the way, and find resolution and next steps. It will also enable community members and CFG holders to actively govern the protocol at scale.
In addition it could also help:
- Uncover opaque underwriting practice, poor structuring and pricing, and material information that investors should be made aware of.
- Validate existing assumptions, initial hypotheses, and secondary assessments of structured credit risk by inviting qualified third parties to analyze and verify RWAs through a system of checks and balances.
- Pull the Centrifuge community, broader TradFi credit ecosystem, and DeFi protocol partners into the discussion and evaluation of financing RWAs on-chain.
The POP is proposed to follow three stages:
- Proposal: POPs are publicly submitted for community discussion and voting through the Centrifuge Forum
- Assessment: POPs enter private due diligence and are risk assessed, legally reviewed, and structured by qualified third parties, resulting in a publicly available report and analysis
- Onboard: POPs are reviewed in totality, enter final discussion and evaluation, and are ultimately voted upon for onboarding RWAs through a Centrifuge Pool.
POPs could see engagement from some, if not all, of the following groups:
- Investors from crypto, defi, and traditional credit markets
- Centrifuge DAO orgs and individuals
- DeFi KOLs and other Centrifuge community members
- Third party service providersDOT ecosystem participants
- Engineering leads across DeFi
All Centrifuge community members and ecosystem partners will have (and should take!) the opportunity to voice their opinion and vote through the Forum as the POP begins. The ultimate vision is to take this governance on-chain, allowing CFG holders to stake towards POPs they wish to see launch on Centrifuge.
There will be dedicated time in Community and Governance calls in the coming weeks to discuss this together in real-time.
The POP will be iterated through the Forum in the coming weeks to ensure community understanding and support as we turn into the month of May.
As the POP is proposed in three stages, the POP Proposal Stage has been released to the Forum to allow the POP process to begin. This first stage is driven primarily by the POP Template, which includes guidance criteria for all POPs, and is the first and foundational step of the POP process.
As this is a first iteration, please provide feedback and ask as many questions as possible through the comments below.