Centrifuge (CFG)

Centrifuge (CFG) bridges real-world finance and decentralized finance (DeFi).
It allows businesses to tokenize invoices, loans, and real-world assets (RWAs) so they can be used as collateral in on-chain lending.

Its goal: unlock global liquidity for small and medium enterprises (SMEs) while giving crypto investors access to stable, asset-backed yields.

What is Centrifuge?

Centrifuge was founded in 2017 and runs on the Polkadot ecosystem.
It enables asset originators (like fintechs or lenders) to bring off-chain financial products — invoices, mortgages, trade receivables — directly into DeFi protocols.

Launch year: 2017
Technology: Tokenized real-world assets on Polkadot
Token: CFG
Purpose: Bridge traditional credit markets and DeFi liquidity

Centrifuge’s Tinlake platform has already financed hundreds of millions in real-world loans through on-chain pools.

How Does Centrifuge Work?

Asset originators create pools of tokenized real-world assets (RWAs).
Investors provide liquidity using stablecoins (like DAI).
Smart contracts manage yield, repayments, and risk distribution.

Each pool issues two tranches:

Tin (senior): lower risk, lower yield
Drop (junior): higher risk, higher yield

CFG tokens are used for governance, staking, and transaction fees across the network.

Why Centrifuge Matters 🏗️

Connects DeFi to real assets: credit, invoices, and loans.
Stable yields: backed by real-world cash flow.
Institutional partnerships: integrated with MakerDAO and Aave.
On-chain transparency: investors can track every asset backing their yield.

Centrifuge is a key piece of the emerging RWA-DeFi stack, making traditional finance more open, transparent, and programmable.

Centrifuge Use Cases

SME financing: unlock liquidity for businesses with invoices.
DeFi collateral: RWAs backing stablecoin loans (e.g. DAI).
Treasury diversification: stable yield for DAOs and funds.
Credit markets: on-chain lending without banks.

Risks of Centrifuge ⚠️

Counterparty risk: defaults from off-chain borrowers.
Regulatory exposure: must comply with global lending laws.
Limited liquidity: RWA pools are less liquid than crypto assets.
Adoption challenge: complex bridge between TradFi and DeFi.

Lanzo Tip 🧠

Centrifuge is one of the few crypto projects solving real finance problems.
But remember — real yield comes with real borrowers. Always research the pool you invest in, not just the token.