Centrifuge, Frax and Axelar Demonstrate the Power of Interoperable RWAs

Real-world assets (RWAs) on-chain are a surging narrative in Web3, but scale is a problem. RWAs are much less useful without have blockchain interoperability.

RWAs are assets tokenized on the blockchain, enabling greater accessibility. In fact, RWAs are interoperable by nature, being on-chain representations of off-chain assets. But like elsewhere in cross-chain, just bridging them from the real world onto the blockchain is not enough. To reach their potential, RWAs must be:

• Scalable: It’s not enough to issue assets on one chain. Financial institutions and jurisdictions each have their own requirements; for an RWA to reach its maximum value, it must connect to liquidity and applications across multiple environments, with the ability to connect to new ones over time.
• Programmable: RWAs’ on-chain representations must move on networks that are Turing-complete, like Ethereum, where logic can be encoded to simplify and abstract tasks for both users and developers.

Centrifuge, Frax & Cross-Chain RWAs

Frax Finance has long been considered one of the most innovative ecosystems in DeFi. Centrifuge is a leader in the tokenization of off-chain assets. Earlier this year, Frax unveiled an RWA strategy and, just this week, Centrifuge and Frax announced an integration.

From Centrifuge’s announcement:

Yesterday, the Frax community voted in favor of a debt ceiling of $20 million to be established for the Anemoy LTF, a BVI registered and regulated US Treasury fund on Centrifuge. This follows the recent approval of the Aave treasury for a $1m pilot investment into the same fund.

Sam Kazemian, founder of Frax Finance, said: ”As an early pioneer in real-world assets, Centrifuge has focused on building institutional grade products that are safe, resilient and built for scale."

Axelar makes these connections possible, allowing protocols and liquidity on any chain to interoperate with RWAs issued by Centrifuge.

In fact, both Frax and Centrifuge use Axelar for programmable and scalable interoperability to take their technology and assets cross-chain with maximum impact and utility:  

• Frax has approved Axelar as the cross-chain infrastructure that will scale Frax securely beyond its native bridge, Frax Ferry.
• The ‘Centrifuge Everywhere’ multichain strategy is powered by Axelar, bringing native Centrifuge RWAs to Arbitrum, Base, Celo and Ethereum.

A Growing Ecosystem of Interoperable RWAs

There is no one-blockchain-fits-all in RWAs. Here, the most important technology is going to be interoperability.

Centrifuge and Frax are among a cohort of leaders innovating in interoperable RWAs. Axelar network provides these projects with programmable and scalable interoperability, supporting groundbreaking RWA implementations with partners like Circle, Ondo and Onyx by J.P. Morgan.

Momentum in the category of interoperable RWAs has surged in 2023. Here are a few examples:

Circle

It may not be obvious, but stablecoins collateralized by dollars (or dollar-like instruments such as Treasuries) are also RWAs. Circle is one of the leading issuers, with $25 billion USDC in circulation today.

USDC is a vital component of liqudity and utility in countless decentralized applications (dApps) in Web3, spanning multiple blockchains. In this environment, cross-chain UX can get muddy and fragmented, with different wrapped versions of the same asset competing for use on the same blockchain.

To combat this, Axelar and Circle have joined forces to enable Composable USDC, developing one-click interchain experiences with native USDC and function calls to any dApp on any connected chain.

Mountain

Mountain Protocol issues USDM, a permissionless, interest-bearing stablecoin backed by short-term US Treasury bills. Yields are passed on to users via rebasing.

With Axelar, USDM can be issued permissionlessly across chains.

Ondo Finance

Ondo Finance’s mission is to make institutional-grade financial products available to all. Its stablecoin USDY is a tokenized note backed by short-term US Treasuries & bank demand deposits. Unlike many stablecoins, it generates yields for depositors.

This November, Ondo announced Ondo Bridge, powered by Axelar, supporting issuance of USDY with native functionality built into the stablecoin, across all supported chains.

Onyx by J.P. Morgan, Apollo & Provenance Blockchain

Provenance Blockchain is a leading decentralized platform for tokenizing assets, with some $10 billion under administration. With Axelar, RWAs tokenized on Provenance can go anywhere in Web3  —  seamlessly connecting financial systems across networks.

In a proof-of-concept announced earlier this year, Axelar connected Onyx by J.P. Morgan systems to on-chain shares in Apollo funds tokenized by Provenance and Oasis.

The result was a successful test of automated portfolio management with cross-chain RWAs, conducted as part of the Monetary Authority of Singapore’s Project Guardian.

In one of the most innovative uses of RWAs to date, a portfolio manager changed investment models by replacing one Apollo Private Equity Fund with another, using a Rebalancing Module to automatically rebalance a large number of portfolios that followed the strategy, including order placement and settlement activity. This unique-to-blockchain aspect showed how interoperable blockchains could market-wide composability and automation efficiency while dramatically reducing human error in the $5.5 trillion portfolio-management industry.

About Axelar

Axelar is the programmable Web3 interoperability platform, connecting over 50 blockchains via a secure, scalable network – internet infrastructure for the world’s next super app. For partners ranging from Uniswap to Circle, Axelar enables scalable cross-chain solutions. Users interact with any asset in one click. Developers span multiple blockchains as though building on one, supported by a simple API and a permissionless ecosystem of tools and service providers. Backers include Binance, Coinbase, Dragonfly, Galaxy and Polychain. See what full-stack interoperability can do for your dApp.

Learn more at axelar.network.

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