💹Securitzation

Unlocking liquidity and new financial market solutions

Building a better financial system is the core ethos of DeFi.

The framework of our contemporary securitization infrastructure is cobbled together with a combination of PDFs, Excel spreadsheets, and a complex network of third parties. These external entities often lack a genuine need or desire to be intricately involved. For a clearer perspective, PWC offers an insightful visual representation of the usual collection of external parties and service providers in a standard securitization context:

The core function of the securitization is to aggregate cash from the underlying obligors, divvy them up, and distribute the cash to investors.

Jumping ahead to the present, DeFi protocols such as Centrifuge have successfully emulated the fundamental aspects of securitization. This involves the consolidation of payments, their subdivision, and subsequent distribution to investors. This is achieved by harnessing the capabilities of a public ledger, smart contracts, and stablecoins. Investors participating in Tinlake, Centrifuge's marketplace, can acquire DROP and TIN tokens, which are non-fungible tokens (NFTs) representing senior or junior "on-chain CUSIPs," respectively. In return, they receive continuous distributions linked to their investments.