RWA Market: The Aave Market for Real World Assets goes live

  • December 28, 2021

Today the Real World Asset (RWA) Market goes live.  Built on Centrifuge and Aave, the RWA Market is the first diversified money market on Aave for real world assets, bridging DeFi to the infinite potential of the real-world. It is launching with 7 pools and is already allowing liquidity providers to deposit USDC.

How does this work? The Aave Protocol allows money markets to be created where people can borrow tokens by depositing collateral. Interest rates go up and down depending on the utilization of the market.

RWA Market is serviced by END_Labs and allows businesses to finance their tokenized Real Estate Bridge Loans, Trade Receivables, Cargo & Freight Forwarding Invoices, Branded Inventory Financing, and Revenue Based Financing using crypto. It allows investors to diversify their portfolio with uncorrelated, stable assets.

With RWA Market, the world of TradFi is taking a step towards DeFi. Aave, one of the trailblazers in the DeFi space RWA in the form of this first permissioned pool is a huge step for Aave towards a wider adoption in traditional finance. Aave users who previously only were able to lend against crypto native assets can now earn yield against stable, uncorrelated real world collateral.

We are a pioneer in bridging RWAs to the DeFi sphere. In April this year we were first to introduce RWA as collateral for Maker. With Aave and Maker Centrifuge issuers now have one more source of liquidity further diversifying their capital.

“The RWA Market is a much needed building block not only for protocols such as Aave, but across DeFi as a whole. Knocking down barriers of entry and making DeFi accessible to all is part of the Aave Companies’ vision, and we are excited to be fulfilling this through the collateralization of real-world assets, made possible by Centrifuge.”

– Stani Kulechov, Founder & CEO of the Aave Companies

Issuers create pools for their assets. Investors buy tokens from these pools by depositing stablecoins into the pool. The issuers can then borrow stablecoins against these assets and turn this into fiat currency for real world borrowers. For all pools assets and the performance of the portfolio is fully transparent on chain visible not just to investors but everyone; check it out. Pools typically focus on a specific asset class, for example real estate or trade finance.

With the RWA Market, when a pool has a need for capital the issuers can not just opt to accept direct investments but also deposit the pool tokens in the Aave protocol and thus directly borrow from any RWA Market investors. RWA Market investors through that get a diversified portfolio of senior secured real-world assets on the Centrifuge protocol, a portfolio completely uncorrelated to crypto assets.

“The RWA Market bridges the regulated world of TradFi to the trustless world of DeFi.” states Lucas Vogelsang, CEO of Centrifuge. “Creating an infrastructure to securely onboard RWA that is able to scale has been exciting and we’re proud to see this work pay off.”

The Centrifuge community is discussing liquidity rewards for early liquidity providers. Should governance decide to move ahead, the RWA Market will qualify for wCFG rewards.

The RWA Market is onboarding real businesses on the asset side and institutions on the investor side to make it easier for everyone globally to access financing.

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