Cryptocurrency Centrifuge (CFG) has seen its price surge by more than 45% over the last 48 hours and 20% today alone. This comes on the heels of a strategic collaboration between the decentralized finance protocol Centrifuge and the stablecoin platform MakerDAO.
The Power of Partnership
According to crypto analyst James Tolan (@JxTolan on Twitter), the partnership with MakerDAO has been “vital” to Centrifuge’s recent success. He outlines how the two products work together to create a new liquidity stream for real-world assets:
“Centrifuge allows users to create digital tokens that represent real-world assets like invoices or real estate. The asset owners can get a loan on the blockchain backed by their real-world asset tokens.”
Expanding Access to Capital
Here’s how the partnership connects these real-world asset-based tokens to MakerDAO’s decentralized credit capabilities:
“Centrifuge assets can be locked in Maker Vaults as collateral to generate DAI. The stablecoin is backed by the underlying real-world asset tokenised with Centrifuge.”
This gives asset holders a new way to access capital against their property or unpaid invoices. It also diversifies the collateral behind DAI, the largest decentralized stablecoin.
Tolan summarizes the benefits for each protocol: “For Maker this diversifies the collateral type in the Vaults, extending beyond crypto assets. Traditional collateral makes DAI more resilient. For Centrifuge, it provides a source of liquidity for the borrowers on the platform, allowing Centrifuge to onboard more originators.”
What’s Next for Centrifuge?
Tolan believes this is just the start, saying: “The next step for Centrifuge is to expand this approach to protocols like Aave and Frax Finance.”
With CFG up over 45% in the last two days, the market clearly likes the potential for Centrifuge to bring more real-world assets on-chain through collaborations. As Centrifuge themselves said recently: “this is the evolution of the RWA [real-world asset] x Stablecoin saga.”
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