RWA Initiative for the Polygon POS Bridge
Hi everyone - Grayson from k/factory, a core contributing organization to the Centrifuge protocol.
Size of the Opportunity / Problem
In looking at the top USDT and USDC holders ranked on Ethereum, the Polygon bridges sit at #7 for Tether with $915M, and also #7 for USDC with $305M. This alone is $1.2B in stablecoins not accruing TVL to the Polygon Network, and not earning yield for the community.
Solution: Ultra-safe RWAs
We propose taking a small portion of stablecoins (USDC & USDT) in the Ethereum bridge, and investing them into T-Bills native to the Polygon Pos Chain, or other applicable Polygon chains. The Anemoy Liquid Treasury Fund currently yields ~5.15% (net of fees), meaning a conservative 20% allocation from stablecoins could earn an annual yield of $12.4M that otherwise doesn’t occur.
The following is an example with solely T-Bills, although other assets could be implemented as well:
This solution would take x% of idle stablecoins in the USDC and USDT Ethereum bridges, and invest them into T-Bills in the form of the Anemoy Liquid Treasury Fund.
Some example key parameters being:
- RWAt - the target allocation to T-Bills (ex. 20%)
- RWAUB - the upper bound allocation (ex. 25%)
- RWALB - the lower bound allocation (ex. 15%)
This allows the bridge to maintain RWA allocations within a certain defined range. If T-Bills in this scenario reach 25% of the bridge, 5% would automatically be sold for stablecoins to revert to the 20% target and vice-versa.
There is also a significant opportunity to integrate other asset classes such as corporate bonds and various forms of private credit purpose built for the bridge. We are happy to explore!
Centrifuge is unique in its ability to work with DAOs to build out the legal and operational infrastructure to access permissioned products through our Centrifuge Prime offering. This would allow a real world foundation to be set up on behalf of the bridge to execute orders from governance.
About Centrifuge
Founded in 2017, Centrifuge is one of the original and largest real-world asset protocols, having financed over $600M in assets. Some of our previous work includes working alongside MakerDAO, BlockTower Capital, GnosisDAO, Frax, Morpho, and Aave.
Centrifuge is asset-agnostic, and multi-chain by design. Centrifuge works with many asset managers to bring funds and assets onchain, to any EVM compatible network. We currently support Ethereum, Base, Arbitrum, and Celo, with capability to support Polygon if the proposal moves forward. This proposal would not only benefit the community in earning yield and growing TVL, but be the catalyst for RWAs expanding on the network.
We propose that Polygon initially allocate to the Anemoy Liquid Treasury Fund consisting of U.S Treasury Bills due to the conservative nature of T-Bills matching what’s needed for this integration with Centrifuge. It’s important to note that as a next step if requested by the community, higher yielding products like corporate bonds, or tokenized DeFi yield funds could be added as well with partners like BlockTower Capital.
About the Anemoy Liquid Treasury Fund (LTF)
Quick Links:
The Anemoy Liquid Treasury Fund invests exclusively in U.S T-Bills with a maximum maturity of 6-months, focusing on maximizing interest rates and minimizing price and duration risks. U.S. T-Bills are held directly by the fund with the U.S custodian, and the individual asset holdings can be viewed onchain 24/7, and can be redeemed within 8-48 hours. The fund is a BVI-licensed fund open to non-U.S Professional Investors.
View the fund in our app
Below you will find the current asset makeup of Anemoy’s Liquid Treasury Fund as of 6/20/2024.
The Centrifuge app takes transparency seriously as a core value to investors and the public. In the assets tab, anyone can see the individual Bills held by the Anemoy Liquid Treasury Fund, with the ISIN/CUSIP securities identification number available.
Above is a detailed view in the Centrifuge UI of a single T-Bill security.
Source: Anemoy Deck
Benefits of the Anemoy structure include:
- Daily Liquidity: The fund offers daily redemption orders with settlement in 8-48 hours depending on market hours.
- Direct Ownership: The tokens serve as direct evidence of ownership of the fund shares, allowing cost-efficient redemptions and providing full legal claims on assets.
- Investor Protection: Prospective investors must adhere to the Know Your Customer (KYC) and anti-money laundering requirements of a BVI-regulated professional fund, ensuring a secure and transparent investment environment well-protected from regulatory risk and sanctions enforcement.
- Transparency: Centrifuge provides near real-time onchain visibility of holdings, returns, and tokenized U.S. Treasury Bills.
- Ulta-low fees: Fees for the fund are 15bps annually (7.5bps Anemoy management fees + 7.5bps Centrifuge protocol fee).
Anemoy LTF tokens are the individual shares in the BVI fund, and come with full legal shareholder recourse rights to the underlying assets under BVI law (shares are issued as tokens following BVI law). The token price directly reflects the NAV of the fund with fees already withheld from the price. The NAV is updated daily or when an investor invests/redeems in the fund before any investment or redemption. The token is not a rebasing token.
As RWAs continue to grow in sentiment and size, we think key initiatives like this within decentralized networks have a chance to push both DeFi and RWAs forward. Centrifuge is uniquely positioned to be able to work alongside decentralized organizations as demonstrated by experience, and our platform being the one-stop shop for RWA integrations and offerings as demand for different assets arise.
We look forward to engaging with the community on this initiative to answer questions, and dig deeper into the details. We hope that by sparking these initial conversations, we can further develop a RWA strategy for the network/DAO.
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