Centrifuge, a pioneering force in the tokenization of real-world assets (RWAs), has unveiled an institutional-grade lending market, leveraging U.S. Treasury-backed tokens as collateral. This market is powered by the sophisticated vault infrastructure of lending firm Morpho and resides on the Base network—an Ethereum layer-2 platform engineered by crypto giant Coinbase.

This innovative market is designed to facilitate the collateralization and borrowing against a suite of Centrifuge-affiliated financial instruments. These include the Anemoy Liquid Treasury Fund (LTF), Midas Short Term U.S. Treasuries (mTBILL), and Hashnote’s U.S. Yield Coin (USYC). The introduction of this market underscores the growing trend of integrating traditional financial assets, such as tokenized Treasury bills, into the blockchain ecosystem—a domain Centrifuge has been exploring since 2017.

In the earlier days of its venture, Centrifuge encountered significant liquidity challenges when experimenting with RWA markets on decentralized finance (DeFi) platform Aave. Co-founder Lucas Vogelsang recalls that tokenized assets were then not sufficiently liquid, limiting their utility. However, the financial landscape has since evolved. The increasing market maturity of short-term assets like Treasury bills now makes the lending use case far more feasible.

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“This RWA market with Morpho is designed to imbue these tokens with genuine utility,” Vogelsang noted in a recent interview. “For instance, if you possess a Treasury bill and need a quick infusion of USDC for a short duration—be it hours or days—you can obtain that liquidity without undergoing the convoluted process of redeeming the bill, waiting for the issuer’s response, and potentially incurring fees. Essentially, you gain near-instant liquidity without relinquishing the underlying asset used for borrowing.”

USDC, issued by Circle, stands as the second-largest stablecoin by market capitalization, further underscoring the market’s significance.

This collaboration also marks a significant milestone in blockchain finance: it is the first instance where a permissioned lending market integrates Coinbase Verifications. This feature enables Coinbase customers to self-attest their completion of Know Your Customer (KYC) procedures through the Ethereum Attestation Standard, enhancing the security and compliance of transactions within this ecosystem.

The Morpho Vaults, integral to this lending market, will be curated by Steakhouse Financial and Re7 Labs, ensuring a robust and secure environment for institutional participants. This new market is poised to revolutionize how real-world assets are leveraged in the blockchain space, blending traditional finance with cutting-edge decentralized technologies.