Tinlake, Centrifuge’s platform bridging real-world assets to decentralized finance via tokenization, continues to witness steady growth in its total locked value that has been unaffected by the recent downturn in the crypto market.
Platform’s Real-World Asset Pool Continues To Expand
After an impressive growth at the start of 2021, the funds locked in the DeFi market have tumbled significantly in the last couple of months. Part of this is due to the significant price declines in many of the top cryptocurrencies. Since DeFi is correlated to cryptocurrencies, the drop in values of BTC and ETH impacted almost all DeFi protocols, leading to a significant fall in DeFi’s total capitalization.
Amidst the volatility of the crypto market and the nosedive of the DeFi market, Centrifuge’s Tinlake, the financing dApp bridging real-world assets (RWA) to DeFi via tokenization, continues to grow its total asset capitalization. Even during the recent bearish cycle, Tinlake successfully maintained its average monthly growth ratio. Per a report from Rockaway Blockchain Fund (RBF), the total value locked in Tinlake pools has been expanding by a 73% compounding monthly growth rate (CMGR) between October 2020 and June 2021 and shows few signs of slowing.
Tinlake is a fully decentralized financing protocol, interoperating between blockchains while plugging into various funding sources. By tokenizing real-world financial assets, such as invoices, mortgages, royalties, and more into NFTs and using them as collateral in the real-world asset pools, Tinlake enables businesses to responsibly finance real-world assets through DeFi while providing access to bankless liquidity.
Simply put, real-world assets are assets that have no relation to crypto. Hence, a significant drop in ETH has no impact on any pool on Tinlake. As a result, several Tinlake pools, including NewSilver’s real estate pool, consumer loan pools, trade receivables pools, and more, are operating as usual, with total value locked (TVL) growing steadily. Among the largest pools are NewSilver Series 2, with approximately $9.4 million of locked-in financing, and 1754 Factory, with $5.9 million of locked-in financing.
An Enormous Market For The Taking
Tinlake, a dApp built on the Centrifuge chain, allows investors to invest across several pools created by ‘asset originators’ to generate stable returns. The dApp enables replicating a real-world asset in NFT-form, which is then locked as collateral within the platform to access financing.
As of now, there are nine active and one upcoming pool on Tinlake, six of which are oversubscribed. These pools cover real-world assets such as music streaming invoices, real-estate bridge loans, and freight forwarding invoicing, to name a few. The team behind Centrifuge understands that real-world assets make up the majority of the traditional financial ecosystem. By effectively bridging RWAs to DeFi, the platform can unlock trillions of dollars in value to help further accelerate the widespread adoption of crypto.
Centrifuge expects Tinlake to gain even more traction, potentially adding up to two to three new pools by the end of the year. According to RBF, in the factoring vertical, Tinlake may generate €72 billion ($86 billion) in annual originations. This figure represents 1.8% of the total global factoring market.
RBF also forecasts that Centrifuge could tap the asset-backed securitization market through further dApp development. According to the research, new issues valued at $2.046 trillion are expected to hit the market in 2026. If Tinlake captures 3% of the global ABS market, this will result in $61.3 billion in new securities financed each year.
Compared to investment banks, Tinlake offers asset originators significant advantages. The decentralized method makes funding easier for small and medium-sized businesses that may find it challenging to raise funds from traditional avenues. Moreover, as the Centrifuge team continues to optimize Tinlake’s process, capital efficiency, and timeliness, it might be very well equipped to compete with established investment banks and financial institutions.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.