Let's Get Real (World Assets)
Founder Spotlight with Lucas Vogelsang (originally published 12 Dec 2022)
One theme that we are seeing emerge in this crypto winter is real world assets (or RWAs if you’re looking for a catchy, three-letter acronym). Nobody has a perfectly clear crypto crystal ball, but my point of view is that RWAs will become a key area of focus in the next bull market cycle.
Centrifuge is one of the leading DeFi platforms for tokenizing real-world assets (RWAs). This company is blazing the trails in what we believe to be the future of DeFI - bringing real world assets (RWAs) on chain, making them programmable, easily transferable, just like crypto native assets are today. They recently announced a partnership with BlockTower and MakerDAO that will bring an additional $220M in RWA to Centrifuge. We are proud backers of Centrifuge and participants in Centrifuge’s governance. I recently interviewed Lucas Vogelsang, the CEO & Co-Founder of Centrifuge.
So, what is the difference between real-world and other assets?
In simple terms, real world assets are assets whose representation typically originated in the real world, rather than the crypto world. For example, a house mortgage originated by a mortgage company via a paper contract is a “real world” asset. On the other hand, Ethereum or Bitcoin is not RWA.
It’s important to note that this distinction seems binary -- either “real world” or “crypto-native.” In reality, the assets that get categorized as RWAs did not naturally occur in the world without humans making the rules around the assets. Things like mortgages, invoice financing, and even title of a real estate, among many others required a lot of innovation and ledger engineering to reach this point.
In the current state of DeFi, most of the assets residing in the ecosystem are not RWAs, including assets used for collateral in loan origination. We believe that in the next 5-10 years trillion of dollars worth of real world assets (RWAs) will reside on chains. In fact, there will be no distinction between real world assets and crypto assets because all assets will reside on chain.
In the video interview you will see three quick points:
What is the founder origin story?
Lucas dropped out of the university after studying computer science and economics. He spent 10 years in a variety of Web2 roles. Going from consumer productivity tools, to SaaS, to fintech, in 2017, Lucas found crypto as exciting as the internet.
What is the story of Centrifuge?
In 2017, pre-DeFi, Lucas was convinced that open blockchains were going to change how we agree and transact with each other. Centrifuge launched the pools of loans, and later did the token sale in 2021. Fast forward to today, the protocol has gained $87M of TVL in real world assets, including hundreds of million of RWAs loans originated on the platform.
What were/are the existential challenges?
Legal overhead was a constant burden. Building a complicated product in a heavily regulated space did not help with this challenge. Finding the creative, pragmatic GC was the most valuable solution.
Making the prototypes and MVPs, as counter-intuitive as it may seem, was still very important. Targeting smaller problem spaces, mastering the simpler modules before making the product more advanced and complex was key.
Instead of taking on distinct and separate roles that, in the traditional world, are called shareholders, builders, and users, members of DAOs are empowered to be all three at once. Having a core team who delivers the focused product up-front and then reiterates with the community has been the best path. Hiring for improvisers and leveraging the helpful partners to figure out the next best step was the way of progress.
Up Next:
We will be publishing an interview with Sid Powell from Maple. If you are building in this space, reach out to us!