Centrifuge Plans to Use Real-World Assets to Back Aave's GHO Stablecoin

Centrifuge Plans to Use Real-World Assets to Back Aave’s GHO Stablecoin

18 February 2023

Centrifuge, a blockchain-based environment for credit products, is aiming to serve as the real-world asset (RWA) agent for Aave’s new GHO stablecoin.

While discussing governance, Asad Khan, Centrifuge’s DeFi politician, highlighted that their network had the appropriate infrastructure and environment to facilitate real-world integration of GHO. 

GHO facilitators should have a formal proposal ready to go as soon as onboarding is prepared and the protocol team is already crafting the draft.

According to Khan, GHO is a fascinating proposition, ripe with possibilities. By building on the already established Aave community and user base, GHO provides an innovative means of revolutionizing decentralized stablecoin operations.

Presently, Centrifuge is in charge of the RWA activities for MakerDAO’s DAI stablecoin.

According to Khan, the current digital asset market requires a greater reliance on real-world assets such as DAI. He believes that RWA will only become more indispensable moving forward.

Blockworks Research analyst Dan Smith recently reported that MakerDAO is the top player in RWAs, with an estimated $600 million of off-chain collateral backing DAI.

According to the analyst, if a DeFi giant entered the market, it may result in an increase in crypto-oriented RWAs. This would greatly add to the traditional investor’s confidence and legitimize DeFi.

What makes DeFi the perfect platform for RWAs?

Represented by tokens, RWAs can be viewed as digital resources absent from the blockchain and are typically utilized to back up DeFi operations.

RWAs are physical assets, such as cash, precious metals, and property, that have measurable value. Furthermore, they can usually be connected to physical entities or organizations in the real world, unlike crypto.

Khan asserted that, despite the difficulty of onboarding RWA collateral, their facilitator proposal presents an efficient and workable solution. He added that the team is using their in-depth knowledge obtained from prior experiences with MakerDAO and Aave RWA Market.

There has been some debate recently regarding the term RWA.

Luca Prosperi, a major name in the world of cryptocurrency and MakerDAO, wrote on Twitter that referring to digital native assets as RWA may be wrong:

Still, the progressive integration of RWAs – or simply, assets – within the DeFi arena opens up a whole new world of opportunities for debt markets by providing liquidity on the blockchain and hastening the mainstream adoption of cryptocurrencies.

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