Boys Club represents the positive side of crypto culture. Fun. Creative. Whip-smart.
So when Founders Natasha Hoskins and Deana Burke teamed up with us to host their podcasting station at the Real-World Asset Summit, as part of our goal to make real-world assets (RWAs) more accessible, we couldn’t have been more excited.
From lightning-round questions to countdown competitions, their rapid-fire interviews helped sum up some of the hot takes from the day while providing some (much-needed) explanations of what is happening in the ever-changing world of RWAs. Watch them all here.
Shortly after the Summit, Centrifuge’s Cassidy Daly sat down with Boys Club to share more about Centrifuge’s founding story, vision, and why everyone’s excited about real-world assets.
Listen to the full episode here or read the transcription of their conversation below.
Boys Club What are real-world assets?
Cassidy Daly When we talk about real-world assets we are really talking about bringing real assets onchain. The term “real-world” is specific to crypto. In the process of bringing assets onchain, we make everything about holding those assets, accounting for them and hopefully being able to lend against them, all more efficient. You can really think about real-world assets as a way of upgrading the current financial system.
Boys Club What are some of the asset classes Centrifuge is bringing onchain?
Cassidy Daly We started off with a specific focus at Centrifuge around supply chain finance. And what that means is getting your invoices financed. If you are a business that's providing services, you’ll give them an invoice and typically it will take a pretty long time for it to be paid, and so in that time these businesses are looking for financing for that invoice and this is something we see on Centrifuge quite a bit and that was really our focus in the very beginning, but it’s expanded to all kinds of different assets from mortgages to car loans and even inventory that's been shipped across the world – really any type of asset out there that you would want to get a loan for.
Boys Club Stablecoins are real-world assets as well, right?
Cassidy Daly Yes. Actually, I would say one of the more exciting things that we’ve done is we’ve used these assets, specifically mortgages in one example, and used those to back stablecoins. There’s currently a pool on Centrifuge run by an issuer called New Silver and those mortgages are backing Maker’s Dai.
Boys Club How would you define Centrifuge today?
Cassidy Daly Centrifuge is a platform that connects real-world assets to liquidity onchain, and specifically in DeFi. When I say DeFi, I really mean using these financial applications that we have in DeFi that have open access. Open access is really important because it enables businesses to get financing that they cannot within our current financial system.
Centrifuge was born out of a company that a lot of the other co-founders were working on before called Taulia, which was specifically supply chain financing to get small and medium-sized businesses access to loans at a rate that they normally really can’t find within traditional finance. So Centrifuge really came out of taking that to the next level, bringing it onchain and unlocking even more possibilities and better rates for these businesses than they can today.
Boys Club Does Centrifuge provide the loans?
Cassidy Daly Centrifuge enables a small business to get financing without directly going to a bank. Oftentimes these small businesses go to a bank and ask for this loan and banks will either say just flat out “No” because they haven't worked with them before, they don't have much history on them, and doing all of the work required to get that information is just really expensive for most banks.
It’s not necessarily because they want to say “No” to everyone, it’s just that it's not always worth it for them. And when it is worth it for them, they are charged extremely high interest rates. It can oftentimes feel very predatory and sometimes it can be, but it's just often not worth it for a lot of these large institutions.
By bringing this process onchain and making it transparent and more accessible, we are actually enabling businesses the ability to access loans. That being said, Centrifuge right now isn't a platform being directly used by these small businesses, but hopefully, that is where we are getting to in the long term.
Boys Club You mentioned the process of banks needing to get information from businesses in order to approve loans. As it translates to Centrifuge, how is this process being replaced?
Cassidy Daly A big part of a bank having the ability to assess these loans is access to data. And that’s really where bringing these assets onchain comes in because we’re making that data accessible and verifiable by different parties and everything becomes transparent in a way that, not only can someone who wants to assess the credit risk really dive in and take a look at, but they can do it in a more automated, and therefore cost-effective way. A huge problem with the traditional financial system is it not being digitized. When you bring it onchain, you unlock access to all of the data which creates greater efficiency.
Boys Club When we were at the Real-World Asset Summit, we heard from a few people that one day we will bring everything onchain. Do you see that as the future?
Cassidy Daly I do think very many things will come onchain, I don’t think everything single physical thing needs to be represented onchain. It really comes down to what you want to do with that tokenized asset. It’s really about all the things you want to unlock by bringing something onchain.
And when we say bringing something onchain, we are really just talking about identifying ownership of said thing – so maybe that’s a beautiful antique chair that you want to sell in an auction so tokenizing that might provide some kind of authenticity, there might be some track record of ownership of this chair or the materials used, so tokenizing it makes all that data and information more accessible and verifiable.
Boys Club What is the relationship between the object and the onchain representation of it?
Cassidy Daly That’s a really important piece and something we are in the process of solving. Ultimately there are going to be many different services around the tokenizing process itself. One of those could be providing an accurate price feed. Hopefully, because these are going to be open systems, many different service providers will form that can attest to the authenticity of specific assets. Sotheby’s has its version of verifying this chair, its price and its authenticity, but hopefully, we will start to see many different third parties providing these services.
Boys Club There are some meaningful updates that are long overdue in the financial system. What are the benefits of tokenizing real-world assets?
Cassidy Daly The four main benefits of tokenizing real-world assets are:
Disintermediation. Disintermediation is really at the core of all the benefits we could lay out here. As we create a “trustless” and secure system, we remove the need for many intermediaries that exist within today’s financial system. There will still be plenty of different services involved in the process of financing an asset (a credit assessment, for example) - but each one of those services will be transparent, more efficient, and ultimately a lower cost than they are today.
Transparency. Creating transparency in the financial system is important to reduce risk. Just think about the last financial crisis and the many failures that could have been softened (or eliminated) if they had been public knowledge. The more underlying data is made available, the better the system will be at assessing, pricing, and accounting for risk accurately. Transparency is ultimately also what allows for a system to have truly open access to anyone.
Speed & Efficiency. Our financial system today is outdated. Just digitizing many aspects of it would already go a long way to making it faster and more efficient. Take that one step further and bring this process onchain and we can unlock orders of magnitude more efficiency - from asset origination to securitization and even secondary markets - we can get to a system that we could hopefully one day actually consider a free market.
Fees & Cost. Of course, with all of these benefits together: increased efficiency, open access due to transparency, and fewer intermediaries - we can bring the costs of financing down, and especially for those that would benefit from it most - small and medium-sized businesses.
Boys Club What has the response been like from institutions?
Cassidy Daly It has definitely been frustratingly slow at times. Being a project that has one foot in very fast-moving crypto and one foot in slow TradFi has limited how much progress we can make quickly. Some of the slowness has crept into these large DeFi projects. DAO governance is one of those elements that has really slowed things down. Not because of DAO governance itself, but because it's so new and people are unsure of how to work within these governance systems. When you do something for the first time (like we often do in DAO governance), not only are you voting but you are also learning about the voting process more broadly.
In DeFi, we are setting a precedent for the way we are going to do these things going forward, and so bringing TradFi into that has also taken a long time because not only are we trying to explain to them what this is but we are figuring out what this is why we are explaining it to them. It’s really exciting to be at the forefront and innovating, but we all get a little bit impatient sometimes that it's not moving as fast as we want it to.
Boys Club How has the regulatory environment affected the work that you're doing?
Cassidy Daly There’s a regulatory question out there right now which is really just an existential one for all of crypto at the moment. I guess because of the bear market and all the turbulent things that happened it made it something worth focusing on for regulators. This “move fast, break things’ mentality that crypto has needs to be curbed a little bit. Not to say that I really want there to still be permissionless applications and open access to all of these tools we are creating, but there needs to be some sort of conversation that we’re having with regulators to really actively define what is permissionless or what can be fully permissionless.
Boys Club What is your hottest take on real-world assets?
Cassidy Daly I think 2023 was the year of real-world assets. I think in ten years, in 2033, we’re not going to call them “real-world assets” anymore, they’ll just be “assets” because this is just going to be the table stakes of how assets are financed. It will be how we have upgraded our financial system and I’m really excited for that future.
This transcription has been paraphrased for editorial purposes.