Enterprise RWA Investing - Centrifuge (CFG)

Centrifuge is a RWA lending asset project backed by some large VCs. This is an enterprise play going after large money managers who want to find yield producing investments. They recently announced they will be targeting liquid projects to protect themselves during volatile market conditions that are common in crypto (aka, when markets tank, they need to be able to quickly sell assets the community doesn’t want so they don’t lose money on the spread. Put simply, spread is just a finance term for the price an asset was worth when markets were good vs the price of an asset when markets are bad. It can work the other way, but not as risky as good→bad spreads).

What is the project?

• RWA marketplace for large investment firms

  • RWA stands for “Real World Asset” which is an NFT minted for each asset or product (gold, a loan, etc)

• Portfolio management tool for money managers

What is the product?

• Allows money managers to earn yield through RWAs

• Provides money managers with ability to manage their portfolios

Execution of Product(s)

• 12+ yield producing RWAs available (securitized debt like Treasuries, RE, Invoicing etc)

• Market is transparent and very professional, quality info of firm offering the debt

• Two loan offerings, Senior token with lower risk and lower returns, and a junior token with higher returns and higher risk

Market(s) & sub markets

• Medium - large DeFi money managers looking for yield

Tokenomics

• Low supply of tokens, but infinate potential supple

• Inflation of 3% per yr, supply increase of ~155 million since token launch 2 yrs ago

• Major whale holdings of 50%, of initial 400,000,000 tokens, 47.7% went to early backers and 'core contributors'

• Team members have 4 year lock-up, unknown lock-up for financial backers

• 41% of tokens went to Endowment, Grants and Ecosystem

Team & Community

• Highly experienced team with experience tokenizing RWA as far back as 2017 for Maker DAO

• Looking for DeFi Biz Dev employee to grow interest from large money managers

• DAO governed

• Twitter and Discord is professionally managed

• Audited by 5 firms including Trail of Bits

Revenue potential

• Earn fees of 0.40% of TVL, will reinvest in growth of platform

• Current TVL of $285,000,000, earnings of $ 1.1 million /yr

• Goal of $1,000,000,000 TVL by EOY 2024 ($4 million /yr)

Financial partners

• Coinbase ventures, BlockTower, several others

• Raised money in 2021 & 2022

Risks & Downsides

• Risk associated with securitized debt, loan defaults (unsure of the impact to the platform, somewhat shielded)

• Growth, how far ahead will the market look?

• Downward price pressure risk from inflation and investment firm holdings

• Regulatory risk, relationship with BASE adds firepower to potential regulatory action

Model Scores