The Aave Market for RWA is now open for business
The Aave Protocol is used by RWA Market to increase the liquidity of certain assets.
The Real World Asset (RWA) Market went live today. The RWA Market, built on Centrifuge and Aave, is the first diverse money market for real world assets on Aave, connecting DeFi to the infinite potential of the real world. It is launched with seven pools and is already accepting USDC deposits from liquidity providers.
What is the mechanism behind this? The Aave Protocol enables the creation of money markets where people can borrow tokens in exchange for collateral. Interest rates fluctuate depending on how much the market is used.
END Labs RWA Market lets businesses to use crypto to finance their tokenized Real Estate Bridge Loans, Trade Receivables, Cargo & Freight Forwarding Invoices, Branded Inventory Financing, and Revenue Based Financing. It allows investors to diversify their portfolio by including assets that are uncorrelated and stable.
The world of TradFi is taking a step towards DeFi with RWA Market. RWA in the form of this first permissioned pool for Aave, one of the DeFi space’s trailblazers, is a big step towards Aave’s wider adoption in traditional finance. Aave users who could previously only lend against crypto native assets can now earn interest on stable, uncorrelated real-world collateral.
We are a forerunner in bridging the gap between RWAs and DeFi. We were the first to propose RWA as Maker collateral in April of this year. Issuers now have another source of liquidity with Aave and Maker Centrifuge, significantly diversifying their capital.
The RWA Market is a critical component not only for protocols like Aave, but also for DeFi as a whole. The Aave Companies’ mission is to break down barriers to entry and make DeFi accessible to everyone, and we’re pleased to be able to accomplish that with Centrifuge’s collateralization of real-world assets.Founder and CEO of the Aave Companies, Stani Kulechov
Pools are created by issuers for their assets. These pools allow investors to purchase tokens by depositing stablecoins into the pool. Issuers can then borrow stablecoins against these assets, which they can later convert into fiat currency for real-world borrowers. All pool assets and portfolio performance are fully transparent on chain, viewable to everyone, not just investors; check it out. Pools usually specialize in a single asset class, such as real estate or trade finance.
When a pool needs funds, issuers can use the RWA Market to not only accept direct investments, but also to deposit pool tokens in the Aave protocol and so borrow directly from any RWA Market investors. Investors in the RWA Market receive a diverse portfolio of senior secured real-world assets on the Centrifuge protocol, which is fully uncorrelated to crypto assets.
The RWA Market connects the regulated world of TradFi with the untrustworthy world of DeFi. Building a scalable infrastructure to securely enroll RWA has been fascinating, and we’re delighted to see our efforts pay off.Centrifuge CEO Lucas Vogelsang
Liquidity benefits for early liquidity providers are being discussed in the Centrifuge community. The RWA Market will be eligible for wCFG incentives if governance decides to move forward.
The RWA Market is onboarding real businesses as assets and institutions as investors to make financing more accessible to everyone around the world.