What is Centrifuge (CFG)?
👋 New to this? Just start reading at the top — it begins in plain English and gets more detailed as you scroll. Jump to any level:
🟢 The simple version
Plain English — no jargon. Start here.
Centrifuge is a protocol for tokenising real-world assets (RWAs) — it lets businesses bring assets like invoices, mortgages, trade receivables, and carbon credits onto the blockchain as NFTs, then pool these assets into structured credit products that DeFi investors can fund, earning yields backed by real-world cash flows rather than crypto collateral.
Real World Assets in DeFi
DeFi protocols traditionally only accept crypto as collateral. But the real economy generates credit demand from businesses with real assets: a freight company with $5M in unpaid invoices, a mortgage lender with a portfolio of home loans, a commodity trader with warehouse receipts. These businesses can't use DeFi because their collateral is in the real world, not on a blockchain.
Centrifuge solves this: businesses (called "asset originators") tokenise their real-world assets as NFTs on Centrifuge's chain. These NFTs represent legal claims on the underlying assets. Multiple tokenised assets are pooled into a "pool" — a structured credit product with two tranches: a senior tranche (lower yield, protected first) and a junior tranche (higher yield, first-loss). DeFi investors deposit USDC/DAI into tranches and earn yield from the real-world cash flows.
Centrifuge and MakerDAO
Centrifuge's most significant partnership: MakerDAO (the DAI stablecoin issuer) has used Centrifuge pools as collateral for minting DAI. This was one of the first major integrations of real-world assets into a blue-chip DeFi protocol — MakerDAO locked real-world loan pools via Centrifuge and minted DAI against them. This partnership gave Centrifuge significant credibility and demonstrated a viable path for real-world assets in DeFi at scale.
Is CFG legal in India?
Yes. CFG qualifies as a Virtual Digital Asset (VDA) under Indian law. 30% tax on gains and 1% TDS applies. Always consult a tax professional.
🟡 A bit more detail
For when you want to go a little deeper.
Centrifuge's legal structure
Unlike pure crypto protocols, Centrifuge requires a real-world legal structure. Each asset pool is a Special Purpose Vehicle (SPV) — a legal entity that holds the real-world assets. The NFTs on Centrifuge represent beneficial ownership in the SPV. If the borrower (asset originator) defaults, the SPV's legal claims to the underlying assets can be enforced through normal legal processes. This legal-plus-blockchain hybrid is what makes Centrifuge technically RWA — the blockchain layer is the financial infrastructure, but legal recourse exists in the real world.
Centrifuge chain — built on Substrate/Polkadot
Centrifuge runs its own parachain on Polkadot (built with Substrate). CFG is the native token of this chain — used for gas, governance, and staking in the parachain's collator selection. The on-chain protocol handles NFT minting for assets, pool management, and investor accounting. Centrifuge has also integrated with Ethereum (via bridge) to allow DeFi protocols like MakerDAO to interact with pools using ETH-native tokens.
Centrifuge investments involve both smart contract risk AND traditional credit risk AND legal execution risk. If an asset originator defaults, recovering value requires legal process — not just on-chain liquidation. Centrifuge pools are less liquid than crypto-backed DeFi positions. This is higher complexity than standard DeFi. Live data: CoinGecko
🟣 The full technical picture
For the technically curious.
Key facts
- Token: CFG (Centrifuge chain gas + governance)
- Function: Real-world asset tokenisation + structured credit pools
- Chain: Centrifuge (Polkadot parachain / Substrate-based)
- Assets tokenised: Invoices, mortgages, trade receivables, carbon credits
- Pool structure: Senior tranche (protected) + Junior tranche (first-loss, higher yield)
- Key partner: MakerDAO used Centrifuge pools as DAI collateral
- Legal structure: SPV-based — real legal recourse for RWA pools
- DeFi bridge: Ethereum integration for USDC/DAI deposits into pools
- Backing: ParaFi, IOSG Ventures; raised ~$8M seed
RWA tokenisation process
A business wanting to finance invoices via Centrifuge: (1) Creates an SPV that holds the invoices as legal assets; (2) Mints NFTs on Centrifuge representing each invoice's value and maturity date; (3) Deposits NFTs into a Centrifuge pool smart contract; (4) DeFi investors (typically via MakerDAO Vaults or Centrifuge app) deposit DAI/USDC; (5) The SPV sends the funded amount to the originator; (6) As invoices are paid by debtors, proceeds flow back into the pool; (7) Pool repays investors principal + yield at maturity. Each step involves both on-chain smart contract execution and real-world legal contracts — the integration of both layers is what "real world assets in DeFi" actually means in practice.