RWAs Lending Agreement Inventory

Author: Jaden, LD Capital

Preface

As traditional financial risk-free interest rates rise and DeFi yields fall, investors have flocked into the U.S. bond market. In order to re-expand and expand the market size and provide users with more sustainable and stable income, the DeFi protocol uses RWA as a source of collateral or new investment opportunities.

**The cumulative borrowing amount of the RWA lending agreement reached 4.4 billion US dollars, and the peak period will reach 1.4 billion US dollars in May 2022. The current RWA lending agreement borrowing amount is less than 500 million US dollars (excluding MakerDAO). **Especially in the deleveraging stage in 2022, institutions will withdraw funds in a row, and some lending agreements will have bad debts. Although the market has paid more attention to the RWA sector, the borrowing volume has not improved significantly. **In the past year, the growth of funds in the RWA sector was mainly for the subscription business of U.S. bonds. **

This article will mainly introduce the most active lending protocols that access real assets and follow up the developments based on the tracking of Nansen and Rwa.xyz. These protocols are MakerDAO, Maple Finance, Truefi, Goldfinch, Centrifuge, and Clearpool.

Figure: RWAs protocol active loan volume

Source: rwa.xyz, LD Research

MakerDAO

Rank#70

MakerDAO is a stablecoin protocol that allows users to mortgage their encrypted assets to lend out the USD-pegged stablecoin Dai.

The MakerDAO RWAs section is divided into two parts. The first is MIP21, which supports RWA as collateral for lending, and uses Centrifuge Tinlake as the bottom layer, usually charging a 4% stability fee. The proposal was passed in November 2020. The second is MIP65, which supports the acquisition of USDC through the PSM module and strategic investment by Monetalis. The initial debt ceiling is 500 million US dollars, and then the debt ceiling will be raised to 1.25 billion US dollars in March 2023. This part of the newly added 750 million The U.S. dollar will purchase U.S. bonds in 12 installments within the next six months.

Picture: How MakerDAO RWA Mortgage Lending Works

Source: MakerDAO blog, LD Research

As of June 24, 2023, according to dune data, the MakerDAO RWA business scale is nearly US$1.4 billion, accounting for 41% of MakerDAO's balance sheet, bringing in US$5.3 million in revenue, accounting for 52.2% of the protocol's annualized revenue.

Picture: MakerDAO RWAs

Source: dune.com, LD Research

Token Model

The total amount of tokens is 1 million. Due to the additional issuance (to fill the bad debts of the agreement) and the agreement profit destruction repurchase mechanism during the operation of the agreement, the current actual circulation is 977,631.03.

The main function of the token is governance, and the pledge mining function will be added to the Spark protocol in the future.

Centrifuge

Rank#257

Founded in 2017, Centrifuge was co-founded by Lucas Vogelsang, Maex Ament and Martin Quensel, driven by the Pro FIT program of the Berlin-based investment bank and co-financed for development with the European Regional Development Fund (EFE). On January 29, 2022, Centrifuge won Polkadot's 8th parachain slot auction by locking 5,435,100 DOT.

Its product is Tinlake, which supports users to mortgage assets and generate an NFT for financing. Each asset pool has 2 tokens with different risks, Tin and Drop. Centrifuge charges a 0.4% platform fee.

**Centrifuge Tinlake is the underlying layer of MakerDAO RWA mortgage lending. In April 2021, the financial institution New Silver took the lead in establishing a property repair transfer loan pool (fix and flip loans) in its Tinlake contract, relying on MakerDAO as a credit facility to complete the first loan financing. **

At the end of December 2022, BlockTower Credit partnered with Maker and Centrifuge to bring $220 million in real-world assets into DeFi. Maker will issue Dai loans backed by these RWAs, Centrifuge will handle on-chain issuance and tokenization, and BlockTower Credit will act as an asset manager.

In February 2023, Centrifuge proposed in the Aave community to introduce real-world assets (RWA) into Aave and use them as collateral for the native stablecoin GHO. Centrifuge says it will release a formal proposal once the GHO is ready.

From January 2023 to June 2023, there will be no significant progress in Centrifuge.

Although the platform fee charged by Centrifuge is very low, the amount of funds accessed is large, and it is one of the earliest protocols to adopt risk classification.

Token Model

Centrifuge initially released 400,000,000 CFG and distributed it to the foundation and initial contributors, core team, investors and validators. An additional 3% of CFG tokens are expected to be minted annually to pay for PoS block rewards, but tokens used to pay transaction fees are burned to stabilize the total supply of CFG tokens. However, there are few transactions on its main chain, so the amount of tokens burned is very small. Currently, some CFGs are bridged to Ethereum. The main uses of CFG are pledge, payment of transaction fees on the main chain, and participation in governance.

Maple Finance

Rank#395

Maple Finance was founded in 2020 and officially launched in May 2021. Its products are launched on the Solana and Ethereum chains. Its main business is to provide unsecured lending services for institutions. In the past, the main users were encryption companies, so it will be generated under the deleveraging market environment in 2022. $52 million in bad debts.

According to Defillama, **March 2023 is the historical low of Maple Finance TVL (24M), and then the TVL rebounded after the agreement launched a cash management pool for US Treasury bonds in May,**compared to Truefi’s upcoming US For the debt pool, Maple Finance does not have a minimum subscription amount, but judging from the records on the chain, it is still dominated by large-amount subscriptions. Unscheduled loan pools launched on June 12 to increase protocol flexibility. As of June 24, 2023, the TVL of Maple Finance reached 62.82M, of which the TVL of the RWA sector was 22.83M.

Maple Finance charges a platform fee of 0.66% and a performance fee of 2.5% (paid as a percentage of interest when repaying the loan).

Figure: Maple TVL on Ethereum

Source: Defillama, LD Research

Token Model

Maple Finance issues two types of tokens, among which MPL is issued on Ethereum, and SYRUP is issued on SOL, with a total amount of 10,000,000 each. Users can obtain xMPL after staking MPL, and 50% of the protocol revenue will be used to repurchase MPL on the market to reward xMPL holders. The current circulation of MPL is 7.96 million, of which 30.41% are pledged, and the number of MPL that has been repurchased is 30,010.

Truefi

Rank#429

Truefi is an unsecured lending agreement for investment institutions created by the TrustToken team in 2020. TrustToken previously created TUSD, but sold that segment to a company called Techteryx in 2020.

**Truefi protocol TVL has no signs of rebound after falling below 10 million US dollars, and the protocol currently has no active borrowing pool. Adapt3r digital is about to open the US bond pool, the minimum subscription amount is 100,000 US dollars, and it is currently in the registration application stage. **

The agreement charges a 0.5% platform fee.

Picture: Truefi TVL

Source: DeFillama, LD Research

(The agreement shows that the TVL is $17.25M, of which the outstanding loan amount is 7.17M, which is different from DeFillama)

Token Model

The maximum supply of TRU is 1.45 billion, the current token supply is 1,198,450,773, the current circulation is 1,061,445,050, and 251 million tokens are burned. As of May 22, 2023, according to team statistics, the team, token sales, liquidity rewards and governance have locked about 140 million tokens.

TRU value capture comes from:

1. Pledge, approve or reject new loans;

2. reserves;

3. Liquidity incentives;

4. Governance.

Goldfinch

#737

The main business of Goldfinch Finance is to provide loans to entity companies. The target customers are debt funds and financial technology companies and other lending companies, providing them with USDC credit lines.

According to dune data, Goldfinch's active loan volume and agreement TVL will basically be in a state of stagnant growth from May 2022. The total loan amount will remain at around US$100 million, mainly because unsecured lending requires a detailed investigation of the entity At the same time, the lender is usually an institution. In the bear market stage, it is difficult for the lender and the borrower to match the risk and return assessments.

Goldfinch's income comes from the interest paid by borrowers and the withdrawal fees generated by LPs, and DAO will charge 10% of the above fees. LPs need to pay a 0.5% withdrawal fee when withdrawing from the advanced pool, and this fee will also be allocated to the DAO.

Graph: Goldfinch active loan volume/TVL

Source: dune.com, LD Research

Token Model

The total amount of tokens is 114,285,714, and a moderate inflation plan may be introduced in the future (2 years later), which is ultimately decided by the community. The current circulation of tokens is 51.9m, accounting for 45% of the total tokens. Nearly 55% of the total amount of tokens will be released 3 years after TGE, with a monthly release of about 1.76 million.

Clear Pool

Rank#960

The protocol will be launched on the Ethereum mainnet in Q1 of 2022. The team members are mainly from traditional financial institutions. The protocol products include license-free pools and license-required pools.

A permissionless pool means anyone can offer a loan, but borrowers still need to go through the team application list. The permissionless pool size is dynamic, with no limit on the amount of liquidity a lender can provide. Borrowers can use the utilization rate/interest rate curve to optimize the size of the fund pool, there is no definite repayment time of the loan, and the interest is dynamically calculated. Its lending method is similar to mortgage lending agreements such as Aave. However, the utilization rate of the pool needs to be kept below 95%. When the utilization rate exceeds 95%, the borrower can no longer borrow. More than 99%, the lender cannot withdraw money, and the borrower needs to repay part of the funds.

Prime is Clearpool's upcoming permission pool, built on Polygon, and is currently in the testnet stage. All participants in the Prime pool need to go through KYC and AML investigations.

March 2023 is the lowest point of the protocol TVL (2.6m), and the current TVL is 28.49m, but the growth rate of TVL has slowed down since May.

Photo: Clearpool TVL

Source: Defillama, LD Research

Token Model

The total amount of CPOOL tokens is 1 billion, and the valuation of the public offering round is 40 million US dollars, which is currently in a broken state.

Before January 2024, 3.11% of the total token circulation will be released on the 28th of each month.

Token value capture comes from:

1. 5% of the agreement income is used for repurchase;

2. Pledge to get token rewards;

3. Participate in governance.