Hey everyone, Asad Khan from Centrifuge here, please see below for our proposal to deploy Centrifuge to Celo, in support of our partners @flowcarbon.
Background
Tokenization of Real World Assets, or “RWAs”, is among the fastest growing verticals in web3 - in large part due to the increased adoption of on-chain credit solutions. RWAs can represent tangible assets such as real estate or precious metals, or intangible assets such as government bonds or carbon credits. In the words of Larry Fink, CEO, BlackRock “The tokenization of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”
Celo’s recently established Credit Collective consists of several companies bridging a wide range of RWAs onchain. The success of Credit Collective’s recent governance proposal CGP-84 is indicative of the burgeoning on-chain credit market and the strong interest in RWAs from the Celo ecosystem - particularly as it relates to Natural Capital assets and Regenerative Finance.
According to data from RWA.xyz as of 8/14/23, over $4.4B worth of loans have cumulatively been issued across web3 protocols; of which over 10% ($0.46B) originated from Centrifuge.
Centrifuge is, by many metrics, the most successful RWA tokenization protocol across web3. It was the first protocol to bring RWAs onchain, the first to back DAI with non-crypto native assets, launched the first RWA integration with Aave, and is the first protocol to bring an institutional credit funds operations onchain. The assets Centrifuge supports include: commercial real estate, account receivables, inventory financing, structured credit, and carbon credit forward financing.
Through this proposal, we aim to allocate the CELO-equivalent of $150k USD from the Celo Community Fund towards Centrifuge’s timely native deployment on Celo.
Areas of Focus
The scope of this proposal is to natively deploy and successfully launch Centrifuge on Celo mainnet by the end of October 2023. The associated $150k of development costs breaks out as follows:
- $25k - Initial deployment cost of Centrifuge on Celo
- $50k - Audit of Centrifuge on Celo
- $75k - Support, upgrades and maintenance over the first 12 months
Success Criteria
As outlined in CGP-84, “Total Debt Value Locked” is a key metric by which the Celo community can measure the success of Centrifuge. Several companies in the rapidly expanding Credit Collective have registered interest in utilizing Centrifuge on Celo to launch their debt pools.
Since Centrifuge enables the issuance of “ReFi” and Natural Capital assets (eg. carbon credit forward contracts, renewable energy infrastructure loans, traditional development finance) - cumulative impact metrics around CO2, gigawatts, sustainable development goals (SDGs), and domain-specific parameters are relevant indicators of success.
An important feature of this deployment is that Centrifuge pools on Celo can accept capital from Ethereum mainnet and other chains. Consequently, it is expected that launching Centrifuge and associated debt pools will drive significant bridging volume towards Celo.
Known Risks
Given that Centrifuge is a standalone web3 protocol, there is minimal risk in deploying the infrastructure itself on Celo. The primary risks are associated with the possibility of defaults on debt pools, which is not linked to web3 but rather the underlying RWAs. This risk has been historically mitigated by the diligence conducted by the Centrifuge governance community in the “Pool Onboarding Process (POP)”.
The Centrifuge community has recently established the Credit Group, a team of outside experts capable of providing risk analysis for Pools at launch. This function helps to ensure that the underlying deal that establishes the Pool is arranged in a way that is consistent with best practices, competitive to market standards, and most importantly, with due regard to appropriate risk management and compensation for investment returns.
Implementation
Budget
We request to set our spend permit on the community fund at 400,000 CELO - but hope to not use the full amount. This number accounts for CELO at $0.375 (150,000 cUSD from 400,000 CELO) and protects the budget from acute market volatility. Any unutilized CELO will remain in the community fund.
Multisig
A Multisignature wallet hosted on Gnosis Safe will be used to manage and deploy the funds with a required 2 of 3 signature threshold. The contract address is 0x34CbB11f19D9B6F1fC54d20B5e248Db4a9B9afa2 and can be found at (Safe{Wallet} – Dashboard). The signers on this multisig are:
- Lucas Vogelsang (Centrifuge): 0xAAA0da6a9673110a15bA11fAc8eE142A8D86E117
- Nirvaan Ranganathan (Flowcarbon / Climate Collective): 0x42B4a02f79438D558AB33E326638ed752b94D187
- Tomer Bariach (Flori Ventures / Credit Collective): 0xEBe109b76b606C19DDC890fFcA3e992e6a0fB13D
Proposed Change
[
{
"contract": "GoldToken",
"function": "approve",
"args": [
"0x34CbB11f19D9B6F1fC54d20B5e248Db4a9B9afa2",
"400000000000000000000000"
],
"value": "0"
}
]
Verification
celocli governance:show --proposalID 129 --node https://forno.celo.org
You should see:
Running Checks:
✔ 129 is an existing proposal
proposal:
0:
contract: GoldToken
address: 0x471EcE3750Da237f93B8E339c536989b8978a438
function: approve
args:
0: 0x34CbB11f19D9B6F1fC54d20B5e248Db4a9B9afa2
1: 400000000000000000000000
params:
__length__: 2
spender: 0x34CbB11f19D9B6F1fC54d20B5e248Db4a9B9afa2
value: 400000000000000000000000 (~4.000e+23)
value: 0
metadata:
proposer: 0x42B4a02f79438D558AB33E326638ed752b94D187
deposit: 100000000000000000000 (~1.000e+20)
timestamp: TBD
transactionCount: 1
descriptionURL: https://github.com/celo-org/governance/blob/main/CGPs/cgp-0095.md
