Decentralized money market protocol Aave has expanded its offerings with its latest partnership with Centrifuge. Starting from today, the Real-World Asset (RWA) Market is operational with seven liquidity pools and enabling liquidity providers to deposit USDC on Centrifuge and the Aave protocol.
Until now, Aave users could lend and borrow cryptocurrencies, with interest rates adjusted based on the market demand. With this newly formed partnership with Centrifuge, a decentralized real-world asset (RWA) financing protocol, Aave successfully bridges DeFi with the trillion-dollar real-world asset market.
New Market To Offer More Opportunities For Users
Serviced by END Labs, Aave’s RWA Market will allow businesses to access financing using their “tokenized” real-world assets. Besides empowering SMEs and SMBs to raise funds without any mediators quickly, liquidity providers can diversify their portfolios and earn stable yields.
Earlier this year, Centrifuge introduced the first RWA market for Maker. Businesses can tokenize their invoices, trade receivables, and other real-world assets by leveraging Centrifuge. Once tokenized, participating businesses can post these tokens as collateral to access funding from Aave’s liquidity pools. This partnership with Aave will further help Centrifuge users tap into additional liquidity sources as and when needed.
With the launch of RWA Market, the world of traditional finance (TradFi) takes a step closer to the world of decentralized finance (DeFi). Depositors will be required to complete Know Your Customer (KYC ) procedures and sign a subscription agreement with RWAM (RWA Market LLC) to participate in the marketplace.
Whitelisted Depositors can provide USDC liquidity to the market in return for aDROP, representing a pool of DROP tokens purchased by RWAM and distributed to them. Currently, there are thirty markets on Aave. With today’s launch of the RWA Market, the Aave ecosystem adds another seven permissioned markets. Accordingly, the Centrifuge-Aave partnership offers Aave users yield generation opportunities against stable, uncorrelated real-world collateral.
In the meantime, Centrifuge serves as the bridge between real-world assets and DeFi. An increasing number of businesses are using Centrifuge to access financing, which wasn’t available in the TradFi space. The RWA Market will unlock a new source of liquidity for Centrifuge users by adding Defi composability between Aave and Tinlake, Centrifuge’s asset-backed lending dApp.
As part of the launch, Centrifuge is also offering additional token rewards. The platform supports a wrapped version of its native CFG token as a reward for signing up and plans to distribute 9,250 tokens per day.
