What is Centrifuge (CFG) | What is Centrifuge token | What is CFG token

What is Centrifuge (CFG) | What is Centrifuge token | What is CFG token

Centrifuge (CFG) bridges real-world assets into DeFi (“Decentralized Finance”) to bring down the cost of capital for SMEs and provide DeFi investors with a stable source of yield uncorrelated from volatile crypto assets. In this article, we'll discuss What is Centrifuge (CFG) | What is Centrifuge token | What is CFG token?

In this article, we'll discuss information about the Centrifuge project and CFG token

Centrifuge - Real-World DeFi

Centrifuge bridges real-world assets into DeFi (“Decentralized Finance”) to bring down the cost of capital for SMEs and provide DeFi investors with a stable source of yield uncorrelated from volatile crypto assets.

In today’s financial system, only the largest businesses get direct access to liquid capital markets. Most depend on banks for their capital needs. The lack of an open and transparent marketplace denies these smaller businesses access to competitive interest rates mostly due to market inefficiencies and transaction costs.null

DeFi is a growing financial system without any barriers of entry. Centrifuge wants to bring this benefit to all borrowers that until now had no access to DeFi liquidity.

With our first user facing product - Tinlake - Centrifuge allows anyone to launch an on-chain credit fund creating collateral-backed pools of loans. Tinlake offers an easy way into DeFi liquidity for any business. For DeFi investors, these assets will create a safe, stable yield for their money uncorrelated from attractive yet volatile returns in crypto markets. Through CFG Rewards, investors can farm additional yield and participate in the ecosystem.

Tinlake is currently built on Ethereum, however going forward it will be fully migrated to our Centrifuge Chain and our secure p2p protocol. This will allow accurate pricing and risk assessment of any kind of assets (be that your future revenue as a business, a house or some farm land) and create liquid markets for these assets. As this ecosystem grows, more data will be on chain reducing the trust in the off-chain world and reducing the dependence on a single point of failure.

We believe that Tinlake is only the first step. The Protocol we are building will enable use cases such as Deep Tier Finance fulfilling our vision to foster economic opportunity everywhere.

DeFi - the next financial system

DeFi is a decentralized financial system based on smart contracts that function without intermediaries, such as banks or insurances. DeFi applications strive to fulfill the services of traditional finance in a permissionless, global and transparent manner built primarily on the Ethereum blockchain.

It’s an entirely new economy being built without borders, banks, or government controlled currencies. Centrifuge is built inside of the DeFi economy and will soon have direct integrations with other DeFi protocols such as Maker or Aave, but it has also built a way for traditional finance to onboard easily: NFTs (“Non-fungible tokens”).

Unlike fungible tokens, such as bitcoin, ethereum, or dot, NFTs are non-fungible (“unique”). Centrifuge’s privacy-enabled NFTs are tokenized representations of individual assets, keeping some of the assets attributes private on a p2p protocol, while the Centrifuge Chain - a public, decentralized ledger - tracks the asset ownership. This structure allows us to create something unique in DeFi.

Centrifuge uses NFTs as a digital representation of real-world assets, such as an invoice or a mortgage so they can be used as collateral in Tinlake. This process of minting NFTs from real-world assets is traditional finance’s ticket to accessing DeFi liquidity and will have real world implications:

  1. Expands access to asset financing: going bankless lowers the barrier of entry for originating and investing in assets
  2. Scales asset financing: These pools can grow very big and create liquid marketplaces for illiquid assets.
  3. Creates a bridge between the real world and DeFi: We bridge the value from the real world over to DeFi, in turn adding new liquidity.

Centrifuge Ecosystem

Tinlake

Tinlake is the consumer facing Dapp used by asset originators and investors to finance assets. This is currently built on Ethereum, Tinlake communicates to the Centrifuge Chain via a Chainsafe bridge, but moving forward Tinlake will fully migrate to the Centrifuge Chain.

Tinlake allows for on-chain borrowing against collateralized assets completely managed by smart contracts. Not only does Tinlake enable Asset Originators to access the growing liquidity in the Decentralized Finance ecosystem, it also enables stablecoin issuers to offer a stable store of value backed by collateralized asset pools. Ultimately, Tinlake will become a fully decentralized financing protocol that interoperates with different blockchains and plugs into a variety of funding sources, including a variety of stablecoins.

Centrifuge Chain

Centrifuge Chain is the home for real-world assets (RWA) on-chain. It is a Proof-of-Stake blockchain built on Substrate that enables users to bring their assets on-chain as non-fungible tokens (NFTs). This is the starting point to unlock financing for any type of asset through DeFi. Bridged to Ethereum from day 1. Centrifuge Chain uses its own native token - the Centrifuge (CFG) token. It also incentivizes nodes (known as Collators) and Nominators to participate through a block reward. This public chain is owned and operated by no single party: the Centrifuge token empowers its holders with an on-chain governance mechanism that empowers token holders to guide the development of Centrifuge. The chain also employs the Centrifuge token to stake value and provides rewards for security and for Centrifuge adoption, currently through liquidity rewards.

Centrifuge Chain is built on Parity Substrate, and is currently transitioning from a sovereign chain to a parachain on Polkadot. It relies on staked nodes (Collators) to author blocks and, once Centrifuge Chain becomes a parachain, they will maintain the Centrifuge parachain by collecting transactions from users and producing state transition proofs for Polkadot Relay Chain validators. Any node can offer itself as a Collator candidate, but only a limited number will be selected. Only top Collators by stake are elected into the Active Set. Collators can stake their own CFG and can be elected by staked Nominators.

In order to secure a parachain slot, Centrifuge will host a Crowd Loan from DOT holders in a Parachain Loan Offering (timeline TBA!). DOT holders who stake their tokens on behalf of the Centrifuge parachain slot will receive CFG as a reward.

P2P protocol and Node

The p2p protocol provides a method to create, exchange and verify asset data and is used for private, off-chain data exchange. Asset originators can selectively share asset details with service providers who can assess the data and contribute pricing and underwriting information to the document. The data origin can be verified using cryptographic signatures. The components of the p2p protocol are a collection of Ethereum smart contracts and a peer to peer (p2p) network implemented on libp2p. Ethereum smart contracts are used for

  1. maintaining identities in a similar format to the ERC725 standard,
  2. Anchoring state commitments
  3. Minting NFTs from off chain Centrifuge documents.

The Centrifuge Node provides a simple API interface to interact with the peer to peer network as well as the Ethereum smart contracts.

Centrifuge Token

The Centrifuge token (CFG) powers the Centrifuge Chain. CFG is designed to incentivize desirable behavior on Centrifuge Chain — so called mechanism design — to create a robust, decentralized system. Owning CFG gives users a stake in the Centrifuge network and can be used to pay for transaction fees, stake towards Collators, and participate in Centrifuge on-chain governance. It will also incentivize chain security - both by rewarding DOT holders in the Parachain Loan Offering, and by distributing a block reward to Collators and Nominators. Centrifuge also empowers its holders with governance. Centrifuge Chain uses Substrate’s native governance module, comprising an elected council and the ability to administer network upgrades.

As the utility of Centrifuge grows, the Centrifuge token will capture the growing value provided to users of the network through each of its utilities. This value is primarily captured in the use of CFG for transaction fees, and additionally through its importance in Governance of the network. The token will also serve as a store-of-value through the implementation of the insurance DAO in which CFG will be staked.

Integrations/Composability

The ETH/DOT Relationship

Centrifuge Chain bridges the Ethereum and Polkadot ecosystems - bringing DeFi liquidity from both to finance real-world assets on Tinlake.

This gives Centrifuge an edge on accessing two of the biggest ecosystems in crypto: one for DeFi liquidity today (ETH) and one for speed and a growing ecosystem (DOT).

Current Integrations

Centrifuge Chain is built on substrate and bridged to Ethereum from day 1 through Tinlake. This enables us to plug into on-chain DeFi liquidity across platforms as is reflected in our partnerships with e.g. MakerDAO and Aave.

With MakerDAO, Centrifuge has been collaborating as the first protocol to back its Multi Collateral DAI with tokenized, real-world assets. This is a milestone for MakerDAO and the wider DeFi ecosystem as it not only diversifies collateral risk, but also bridges trillions in volume to DeFi. On the flip side, DeFi opens up a whole new (financial) universe to those companies that have been traditionally neglected by the prevailing financial system. Predatory lending and banks are replaced by smart contracts: a decentralized line of credit approved by a DAO.

MakerDAO is a first, and Centrifuge continues innovating with Aave and other large DeFi protocols to unlock instant liquidity.

How the P2P Network works

The Centrifuge peer-to-peer (P2P) network provides a secure method to create, exchange and verify asset data between collaborators and tokenize the assets into NFTs. Asset originators can selectively share asset details with service providers who can asses the data and contribute information to the minted NFT. The data origin can be verified using cryptographic signatures.

The components of the P2P network are implemented on libp2p. Centrifuge Chain is used for (i) maintaining identities in a similar format to the ERC725 standard, (ii) anchoring state commitments and (iii) minting NFTs from off-chain documents. These NFTs can be bridged to Ethereum to be locked as collateral into Tinlake to finace these assets.

Centrifuge Node

Each collaborator runs or accesses a hosted Centrifuge node to connect to the network. The Centrifuge node provides a simple API interface to interact with the p2p network, the Centrifuge chain as well as the Ethereum smart contracts. The Node operates on a “service bus” principal where plugins and outside systems can subscribe to messages about specific objects (e.g., a procurement application can subscribe to changes of order objects). The P2P Node abstracts the events that occur on the public blockchain, sidechain, and P2P Layer and translates them into messages on this internal bus for other applications to consume. The Node also offers the connectivity to Ethereum for applications that build on top of the network.

Identities

Each entity or collaborator on the P2P network has a verifiable Centrifuge Identity (Centrifuge ID) which is a unique ID assigned to a participant of the P2P network. It keeps track of the different cryptographic keys in use and enforces that this data can only be modified by the creator and/or a delegate chosen by the creator.

The unique identifier of a participant in the Centrifuge protocol is equivalent to the Ethereum address of his/her identity contract. Centrifuge is adopting the DID-compatible ERC725v1 Ethereum standard for self sovereign identities.

A Centrifuge identity has the following credentials:

  • Peer to Peer Messaging Encryption Keys: are used for message encryption. These keys are used to identify the nodes over the P2P network and establish an encrypted communication channel between peers.
  • Signing Keys: Documents in Centrifuge are signed with signing keys. These signatures are a part of the Merkle root that is anchored on the public chain and verifiable at a later time.
  • Ethereum Accounts: When interacting with a smart contract on Ethereum, an account needs to be linked to the identity to act on its behalf. The linked Ethereum accounts are the accounts that are allowed to interact with DApps utilizing Centrifuge.

Document

A document is a structured set of fields with specific field types representing a financial asset. The network supports any document types as long as the formats are agreed upon (via a schema) and shared between selected collaborators. Documents are exchanged encrypted, and are only accessible for parties involved in this private data exchange. Collaborators can be added and removed from a document. Different collaborators can update a document and publish new versions within the set of nodes with access.

Every Centrifuge node can create a document and share it with others. The transport of a document happens privately over secure channels in the P2P network. Every document collaborator keeps a local copy of a document in their storage. An update of a document can be triggered by multiple collaborators and is not restricted to the initial document creator. Whenever a change is made, a calculated merkle root of a document is committed on chain. A new version is only accepted by others if the document root hash exists in the AnchorRepository and the set of mandatory document fields in the new version satisfy protocol-specific requirements.

A smart contract called AnchorRepository is used for carbon dating state updates ensure that the update is made known to all collaborators. A document anchor is the root hash of the Merkle tree of the document. The tree is constructed by adding all fields of a document together with the collected digital signatures from all collaborators (an identity as defined above) as leaves in the tree.

Publishing this anchor achieves that even if a party is censored on the P2P network, it can find out about the update by checking the Centrifuge chain. A third party can easily verify the correctness of a received document on-chain and off-chain by reconstructing the Merkle root from the document based on the well-known document structure for the respective document type. Structuring the document as a Merkle tree allows creation of proofs only revealing individual fields of the document as opposed to revealing the entire document when making a statement about it.

Minting an NFT

Based on the documents representing financial assets, Asset Originators can mint privacy-enabled NFTs (non-fungible tokens) that are locked as collateral into Tinlake to access financing.

For many use-cases, there is a need to keep data related to the asset private. Centrifuge's privacy-enabled NFTs are tokenized representationsa of assets/documents, keeping some or all of the assets attributes private, while a public, decentralized ledger tracks the asset ownership. The NFTs themselves only hold a minimal set of the data of the original document on-chain to avoid leaking private data. The NFT metadata contains a link back to the on-chain anchor as well as a link to the private document on the p2p layer. The on-chain data is used to identify the document uniquely and allows anyone to verify the NFTs data as well as exchange the full document data privately within the network.

Centrifuge NFTs are minted on Centrifuge Chain and bridged to Ethereum. They are compatible with ERC-721 and thus can leverage all infrastructure compatible with ERC-721 NFTs.

We use Merkle proofs that verify the original ownership and document authenticity of an off-chain document, combined with an on-chain document registry that allows the NFT contract to verify the authenticity of a request to mint a specific token. By using precise proofs, we can supply privacy preserving proofs that certain fields are present in the NFT to be minted, without revealing the exact value of these fields. Leaves are created by hashing and encoding the property, value, and salts of the data fields which we want to prove,

The document representing the asset thus receives all of the benefits of standard on-chain NFTs, while an off-chain location holds the verifiable private data. At any point, the current holder of an NFT can gain access to the off-chain document by creating a signature that proves ownership of the private key of the address that owns the NFT. This approach introduces decentralized access control schemes where an NFT ownership change can lead to off-chain access revocation. Typically the metadata and the detailed information of an NFT is publicly readable on Ethereum.

How and Where to Buy CFG ?

CFG has been listed on a number of crypto exchanges, unlike other main cryptocurrencies, it cannot be directly purchased with fiats money. However, You can still easily buy this coin by first buying Bitcoin, ETH, USDT, BNB from any large exchanges and then transfer to the exchange that offers to trade this coin, in this guide article we will walk you through in detail the steps to buy CFG token.

You will have to first buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)...

We will use Binance Exchange here as it is one of the largest crypto exchanges that accept fiat deposits.

Binance is a popular cryptocurrency exchange which was started in China but then moved their headquarters to the crypto-friendly Island of Malta in the EU. Binance is popular for its crypto to crypto exchange services. Binance exploded onto the scene in the mania of 2017 and has since gone on to become the top crypto exchange in the world.

Once you finished the KYC process. You will be asked to add a payment method. Here you can either choose to provide a credit/debit card or use a bank transfer, and buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)...

SIGN UP ON BINANCE

Step by Step Guide : What is Binance | How to Create an account on Binance (Updated 2021)

Next step - Transfer your cryptos to an Altcoin Exchange

Once finished you will then need to make a BTC/ETH/USDT/BNB deposit to the exchange from Binance depending on the available market pairs. After the deposit is confirmed you may then purchase CFG from the exchange: https://sales.coinlist.co/centrifuge-option-1

☞ How to Participate? https://coinlist.co/centrifuge#sale-options

The top exchange for trading in CFG token is currently ..........

Find more information CFG token

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