Tokenized Assets in DeFi
Unlock the value of your real-world assets in the decentralized finance ecosystem.
What is Tinlake?
Tinlake is a platform that enables you to draw loans against non-fungible assets, such as invoices, royalty payments or artworks. It dramatically simplifies the process of accessing decentralized finance for previously illiquid assets. Any asset that can be represented on-chain as an NFT (Non-Fungible Token) can be financed using the Tinlake infrastructure.
How does Tinlake work?
Tinlake is a framework of smart contracts on Ethereum, that turns digital representations of real-world assets (Non-Fungible Tokens) into ERC-20 tokens, which then gives access to decentralized lending protocols.
Any asset that can be represented on-chain as Non-Fungible Tokens (NFTs) can be financed using the Tinlake infrastructure.
Tinlake enables platforms to pool NFTs in a smart contract and use them as collateral to borrow money in a stable currency such as DAI. In turn for locking in NFTs, the contract mints fungible ERC-20 tokens, called Collateral Value Tokens (CVTs), that each represents a fraction of the bundled collateral.
The CVTs are then used as collateral and locked into DeFi lending protocols, such as Compound and Maker, to allow instant smart contract based lending.
What types of assets?
Any asset that can be tokenized (represented on-chain as a Non-Fungible Token, NFT) can be financed using the Tinlake infrastructure. This could be a Centrifuge Business NFT or any other NFT following the ERC721 standard. The NFT is an on-chain representation of an individual real-world asset which becomes tradable, assignable and easily fundable. Tinlake can be used with many types of collateral such as financial documents, real-estate or royalties.
The governance of Tinlake is necessary to manage the financing process. Tinlake governance assumes the responsibility of approving borrowers, underwriting and valuing assets, managing rates and funding sources, as well as keeping a balanced portfolio. In case of a payment default, collateral governance manages the liquidation of the assets.
Tinlake facilitates transparency of the collateral pool at any time and supports different ways to add collateral types.
The Borrowing Experience
Imagine the following scenario: Alice owns a small company in Madrid. She delivers goods and sends an invoice to her client, to be paid within 30 days. Simultaneously, Alice receives inventory and needs to pay her suppliers immediately, but she doesn’t have enough money. She needs a short term loan, and can use her outstanding invoice as collateral in Tinlake.
Below you can see what the borrowing process looks like
1. Alice deposits collateral
Alice converts her invoice worth $100 into a digital representation of this asset, a non-fungible token (NFT)
Alice transfers this NFT into Tinlake as collateral for a loan in DAI
2. Tinlake mints CVT
Tinlake mints 100 CVT (a fungible ERC20 token) and locks the CVTs into a crypto Lending Facility, such as a Maker CDP or Compound
3. Dai is drawn
In return, Tinlake draws 90 DAI. The 10 DAI difference is covering the financing fees and is creating a risk retention buffer
4. Dai is lent to Alice
The 90 DAI are forwarded to Alice’s wallet
5. Alice repays debt
Assuming 5 DAI interest, Alice is repaying 95 DAI at the maturity date of her loan to Tinlake
6. Tinlake repays debt to funder
3 DAI remain at Tinlake for the SPV as service charge and 92 DAI are forwarded to the Lending Facility covering also the interest of 2 DAI
7. CVT is returned to tinlake and burned
The 100 CVT are unlocked from the Lending facility and returned to Tinlake.
8. Collateral is returned to Alice
Tinlake burns the 100 CVT, unlocks the NFT and returns it to Alice
Centrifuge builds Tinlake as a decentralized application (dApp) powered by Centrifuge OS, the decentralized operating system for the financial supply chain. Tinlake is a new set of software tools to operate and manage the collateralization and financing of assets. Centrifuge is neither installing, running, operating nor controlling any collateralization or financing offer using Tinlake.
Tinlake is published as open source software. Any entity or person providing services by using Tinlake shall commit to using it at their own risk and with full responsibility. Centrifuge does not give any warranty or representation, whether expressly or implied, of any kind related to the usage of Tinlake, nor does Centrifuge take any responsibility or liability whatsoever for any direct, indirect, incidental, or consequential damages related to the usage of Tinlake, whether in contract, tort (including negligence), breach of statutory duty, or otherwise. Centrifuge will not be liable for loss of profits, sales, business, or revenue, business interruption, anticipated savings, business opportunity, goodwill or reputation or any indirect or consequential loss or damage.