The market will allow for the collateralization of and borrowing against Centrifuge’s Anemoy fund, tokenized T-bills from Midas and Hashnote’s U.S. Yield Coin.
It’s the first time a permissioned lending market will use Ethereum-powered Coinbase Verifications.
The aim is to provide instant liquidity without having to actually redeem the underlying T-bill.
Centrifuge, a startup specializing in blockchain-based tokens representing real-world assets (RWAs), has established a lending market relying on collateral from several U.S. Treasury-backed tokens using lending firm Morpho’s system of vaults.
The market, aimed at institutions, will reside on Base, the Ethereum layer-2 network developed by crypto exchange Coinbase, and allow for the collateralization of and borrowing against the Centrifuge-affiliated Anemoy Liquid Treasury Fund (LTF), Midas Short Term U.S. Treasuries (mTBILL) and Hashnote’s U.S. Yield Coin (USYC).
Porting real-world assets, particularly traditional financial instruments such as tokenized T-bills, to blockchains has become something of a trend in crypto. It’s an area Centrifuge began to focus on as far back as 2017.
Going back just a few years, when Centrifuge was experimenting with RWA markets on DeFi platform Aave, the challenge was these tokenized assets were not very liquid, recalls Lucas Vogelsang, co-founder of Centrifuge. These days, short-term assets like Treasury bills make the lending use case much more viable, and the market has also grown a lot, he said.
“This RWA market with Morpho aims to give these tokens utility,” Vogelsang said in an interview. “If you hold a Treasury bill and you need a bit of USDC for a couple hours, or days, or whatever, you can have that access without having to go through the complicated process of redeeming it, waiting for the issuers to give you the dollars back and possibly pay fees. So, basically instant liquidity without having to actually redeem the underlying asset that you’re using to borrow.”
Circle-issued USDC is the second-largest stablecoin by market cap.
The collaboration marks the first time a permissioned lending market uses Coinbase Verifications, which allows a Coinbase customer to self-attest they’ve been KYC’d by Coinbase following the Ethereum Attestation Standard.
The Morpho Vaults will be curated by Steakhouse Financial and Re7 Labs, according to a press release.