The popular decentralized finance (DeFi) protocol Aave (AAVE) has partnered with the decentralized operating system Centrifuge to launch a new market called Real World Assets (RWA).
In practice, the market will allow users to earn income from real world assets.
Before that, Aave users could only borrow and lend digital assets, with fees varying according to supply and demand.
Now, with the new marketplace, users can tokenize their real-life assets. Also, they can use them as collateral to borrow money.
It is worth noting that, to enter the market, interested users must complete the Know Your Customer (KYC) process.
DeFi with real world assets
According to Aave, the initiative will offer lenders more markets to earn interest. But it will also give the companies behind each of these markets access to more liquidity.
“The RWA market is a much needed building block, not just for protocols like Aave, but for DeFi as a whole,” said Stani Kulechov, founder of Aave, “Break down barriers to entry and make DeFi accessible to everyone it is part of the vision of Aave Companies. We are thrilled to accomplish this through the real-world asset guarantee enabled by Centrifuge.”
Aave is a decentralized lending system based on the ETH blockchain. The protocol allows users to borrow, borrow and earn interest on cryptocurrencies without the need for intermediaries.
Centrifuge, in turn, is a crypto company that allows organizations to tokenize aspects of their operations, such as accounts receivable and commercial invoices. After converting assets into tokens, they can be used as collateral for loans.
In April, Centrifuge partnered with another DeFi protocol, Maker (MKR), connecting DeFi loans with real-world assets for the first time.
The platform was launched in 2017 and has a native token called CFG. The crypto asset is currently trading at $1.02, according to CoinMarketCap.
Meanwhile, the AAVE token is priced at $242, having gone back just over 14% in the past 24 hours.