Will the combination of physical assets and DeFi lending in Dapp Pocket spark the next trend?
Dear DeFi enthusiasts,
This week, Aave announced its collaboration with the real-world asset on-chain platform Centrifuge, introducing new markets on Aave where you can lend to individuals using real-world assets as collateral to earn interest. Today, let's discuss how real-world assets are merging with DeFi.
Headlining this week is the significant progress in "DeFi Index Funds": the DeFi Pulse Index DPI, a collaboration between Set and DeFi Pulse, will kick off liquidity mining and community governance. PieDAO is also launching their index fund DEF+L, while the yield aggregation platform Idle is introducing governance token IDLE and offering airdrops.
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Featured perspectives this week include the outspoken Yearn founder Andre Cronje stating that his lack of tweets does not equate to a lack of creativity. Additionally, the founder of Compound shares his reaction to Cream's integration of FTT and his views on the impact of BitMEX's absence on the market.
Table of Contents
1. Our Perspective
Will the Combination of Real World Assets and DeFi Lending Spark the Next Trend?
Pioneering Real World Asset Lending
Traditionally, most DeFi lending services we hear about involve collateralizing on-chain assets, such as over-collateralizing ETH, wBTC, and other cryptocurrencies to borrow stablecoins. However, platforms that enable borrowing against Real World Assets (RWA) have been around for some time! DMM is a platform that allows car loan providers to collateralize car loan contracts on-chain and borrow ETH, Dai, and other stablecoins. The platform offers users a fixed interest rate of 6.25%. Recently, RealT, which announced a collaboration with Aave, allows real estate titles to be put on-chain, allowing the public to invest as landlords, providing an annual return of approximately 7-10%.
Real World Asset Lending Platform Tinlake
Tinlake is a DeFi platform for real world asset lending based on the Centrifuge blockchain. Unlike DMM and RealT, Tinlake allows various types of assets to be collateralized on-chain to generate NFTs, including freight invoices, warehouse receipts, and real estate. Through collaborations with different asset originators such as ConsolFright and Paperchain, asset originators are mainly responsible for custody, clearing, and other aspects related to connecting real-world assets.
For individuals with financing needs in the real world, valuable assets can be collateralized through suitable asset originators to generate NFTs and borrow stablecoins on Tinlake. Anyone can invest in stablecoins to earn interest after passing KYC. Taking Paperchain as an example, they provide a platform for artists to receive streaming revenue, and by collateralizing Spotify streaming revenue receipts, NFTs can be generated on-chain and used to borrow stablecoin Dai, offering stablecoin investors an interest rate of about 9%.
For investors, Tinlake simulates models of different risk appetites found in traditional finance, offering investors a choice between higher-risk TIN tokens similar to stocks and lower-risk DROP tokens similar to bonds. Overall, the development of linking real-world finance with DeFi, diverse risks, and practical connections has been quite sophisticated.
Integration of Aave and Tinlake
Aave V2 allows the platform to integrate with other DeFi services and continuously open up new financing markets, known as a money market. Tinlake V3 introduces a revolving pool system, enabling funds to flow in and out smoothly. After the integration of Aave and Tinlake, users can directly invest in various RWA financing projects in Aave's Tinlake market, with risk parameters and rules managed by the Aave community. This partnership allows users to participate in various types of real-world asset investments in a DeFi manner without the need to complete KYC on Tinlake, and provides higher liquidity for the financing parties on Tinlake.
Summary: Why Real World Asset Tokenization Is Worth Anticipating
There are many advantages to integrating DeFi with real-world assets: firstly, it makes it easier for the general public to understand. Remember the first time you heard about collateralizing Ethereum to borrow stablecoins - a bit odd, right? What most people need is not borrowing money with money but financing through collateral such as real estate or other tangible assets. DeFi lending platforms operate in a decentralized manner, reducing fees charged by financial institutions and offering high speed, with the process from collateralization to receiving stablecoins taking only a few minutes. Additionally, platforms like Tinlake significantly increase the types of assets available for financing, making it more convenient for those in need of financing, without requiring high thresholds and truly achieving inclusive finance. We have always believed that DeFi will sooner or later converge with the real-world market because no matter how good DeFi is, true value creation lies not in the financial markets but in the real-world assets/services market; we believe DeFi will create a more convenient, efficient, and accessible way of financing.
2. Highlights of the Week
โจ Top Headlines of the Week
Aave Plans to Integrate Real World Asset Markets into the Protocol Through Centrifuge
DeFi lending platform Aave announced a collaboration with Centrifuge, a blockchain that brings real-world assets (RWA) onto the chain. Centrifuge's chain allows customers with financing needs off-chain to collateralize their assets on-chain as NFTs, which are then placed in the Tinlake pool for investors to put ERC20 stablecoins in and earn returns. The release of "Tinlake" V3 and the collaboration with Aave allow the Aave community to participate in the RWA market for interest returns, with the same governance mechanisms as Aave's existing markets.
Index Fund Led by Set Protocol and DeFi Pulse Launches Liquidity Mining
Decentralized asset management protocol Set Protocol and data platform DeFi Pulse introduced a new index product, DeFi Pulse Index DPI, in mid-September, similar in concept to Taiwan's 0050 fund. Users can provide liquidity to the DPI/ETH pool on Uniswap and stake DPI/ETH Uniswap LP tokens on the platform for liquidity mining rewards. Additionally, the platform announced the establishment of a DAO last week, where INDEX holders will be responsible for critical decisions regarding the index, including developing new indices, managing community funds, adjusting product fee standards, and enhancing index performance.
PieDAO Announces Launch of DeFi Index Fund DeFi + L
Ethereum asset management protocol Pie DAO announced the launch of the DeFi index fund DeFi + L. The index comprises seven DeFi assets: COMP, AAVE, UNI, LINK, MKR, SNX, and YFI. PieDAO automatically rebalances the index based on the current market value of the projects, with a maximum individual asset weight cap of 25%. The token comes with governance features, allowing users to provide platform token liquidity on Balancer and stake the earned BPT to receive liquidity mining rewards.
Income Aggregator Platform Idle Introduces Governance Token IDLE
DeFi income aggregator platform Idle launched a governance token IDLE, expected to complete decentralization between October and November this year. The platform plans to distribute 51% of the tokens to users providing liquidity, with the distribution expected to be completed within two years. Early users can receive a 2% airdrop, similar to the previous Uniswap model.
๐ DeFi Protocols
๐ต Stablecoins
๐ Liquidity Mining
๐ป NFTs
๐ฐ Financing
โ Cross-Chain
3. Expert Opinions
Yearn Founder Andre Cronje: I have always been creating. I just don't want to post anymore.
Compound Founder Robert Leshner: The community's response to FTT on Cream is fantastic.
Compound Founder Robert Leshner: With BitMEX gone, it indicates the next bull market will be healthier.
4. Data Indicators
The data for this week is collected from October 6 to October 12. TVL (Total Value Locked) indicates the total assets stored on the platform; IPY (Interest Per Year) is the current borrowed funds multiplied by the annual interest rate, representing the platform's annual interest income. Data Source: DeFi Pulse, CoinGecko. (Unit: Million USD)
5. Memes
"Ethereum killers" watching new layer 2 implementations ship every week on Ethereum be like: pic.twitter.com/MtHHUmOqB6
โ sassal.eth ๐ฆ๐๐ผ (@sassal0x) October 10, 2020