Tinlake is Centrifuge's first product, built on the Centrifuge protocol. It can be used to borrow on the chain through Collateralized Assets, which is completely managed by smart contracts.
In the Centrifuge architecture, NFTs anchor an unchangeable asset record and also represent an asset in the off-chain world. Through Tinlake, asset owners can mortgage their NFTs and convert them into ERC 20 tokens, and then use ERC 20 tokens to lend stablecoins, while investors engage in DeFi borrowing in accordance with contract rules.
With Tinlake as the center, Centrifuge develops the asset chaining process
To generate NFTs that can accurately represent a real-world asset, it is necessary to have a sufficient verification and counter-inspection mechanism for the asset to deal with the supervision or audit that the real world needs to face. Centrifuge tokenizes real assets through two steps to form the corresponding NFT:
1.Documents (Asset Originator) to Asset: Traditional assets come in many forms, such as invoices representing accounts receivable, or unpaid records of streaming media royalties. These physical assets are usually in the form of documents, and in the process design of the assets on the chain, a standard format must be established. Taking invoice assets as an example, it may contain the following information fields: invoice number, buyer information, supplier information, invoice amount and payment date, etc. Centrifuge uses a pre-defined schema to format traditional assets to ensure the uniqueness of assets.
2.Tokenization of Asset: Tokenization of real assets. It is mainly implemented by three modules, including Anchors, Identities and NFTs. The implementation of its smart contract is explained as follows:
2.1Anchors: The formatted asset undergoes a series of data segmentation and encryption processing, and uses algorithms such as Merkle Proof to store the original information of the asset, and finally generates a Hash that can represent the asset and can be verified and checked and stored on the Centrifuge Chain.
2.2Identities: Based on the implementation of ERC-725, it is a smart contract about decentralized identities. Centrifuge allows all participants to have identities, and the asset owner needs to obtain the verifier's signature on the asset, and the signature is processed in conjunction with the Anchors contract.
2.3NFTs: Rewritten based on ERC-721, emphasizing privacy, only deposit certificates on the chain, and do not disclose the original information of assets. After passing the Identities authentication and Anchors asset verification, the asset owner can trigger the minting of the asset.
Asset tokenization is operated by multiple smart contracts, so operating costs need to be considered. If it is implemented in Ethereum, it will inevitably cost a lot of transaction fees. In order to balance issues such as speed, transaction costs, storage efficiency and privacy, Centrifuge uses Substrate technology to establish the Centrifuge Chain public chain.
The process of real-world assets being minted into NFTs takes place in the Centrifuge Chain. In order to consider liquidity, Tinlake is currently built on the Ethereum public chain. Therefore, there needs to be a bridge between Centrifuge Chain and Ethereum.
Centrifuge implemented Bridge, allowing NFTs minted on Centrifuge Chain to be simultaneously minted on Ethereum. At present, Centrifuge has officially certified six Bridges, and the NFTs minted by the officially approved Bridge on Ethereum are allowed to directly go to Tinlake for mortgage loans.
The overall situation of physical assets on the chain
All Centrifuge processes start with real-world assets. After the participants run through the Centrifuge Chain node, the real assets can be tokenized through the API. In terms of process design, the asset owner can use the P2P protocol to encrypt the transmission of the asset to other participants and obtain a key signature that proves the authenticity of the asset. Therefore, before asset owners legally obtain the right to mint NFTs, a series of rigorous off-chain asset review mechanisms need to be designed.
Incidentally, the enterprise supply chain finance SaaS system-SUPLEX developed by BSOS is designed to activate supply chain accounts receivable. Supply chain companies can use this system to convert their accounts receivable into digital assets, obtain verification signatures, and directly connect to financial services. In addition to supporting the docking of centralized financial institutions, SUPLEX can also dock the decentralized capital market, for example, to integrate with protocols such as Centrifuge to create greater liquidity of digital assets.
Centrifuge's next step
Centrifuge started from Tinlake and realized the integration of DeFi and real assets on Ethereum. Recently, he is committed to the creation and optimization of Centrifuge Chain. Centrifuge Chain was established through Substrate and belongs to the Palkadot ecosystem. The next step is to become a parachain of Palkadot.