About Wrapped Centrifuge (WCFG)

The Centrifuge network is a lending protocol built around borrowers/businesses in the real world. Essentially, Centrifuge is a blockchain-based decentralized application (dApp) running on the Polkadot (DOT) network.

There is a native Centrifuge asset, CFG, which is used on that chain for governance and staking; but CFG is not to be confused with Wrapped Centrifuge (WCFG).

The latter, an Ethereum-run ERC20 token, exists as a proxy for CFG, as Centrifuge explains.

But while the CFG token resides on Centrifuge, it can be bridged to the Ethereum chain and used as an ERC20 token, WCFG; using it, holders of CFG can span the Centrifuge and Ethereum chains. In theory, it's a configuration that establishes a through line going from, say, an old-fashioned real estate loan, straight to the widest possible world of decentralized finance (DeFi) and meaning that, in this example, there is no need for banks or brokers.

Each WCFG is backed by one CFG, such that users can interact with dApps that run on Ethereum and support ERC20 tokens. The Polkadot ecosystem, including its experimental "canary" network Kusama, is considered a next-generation layer-1 network built for a future in which legacy chain limitations are cast aside. Centrifuge is one of the bigger projects run on Polkadot and built on Parity Substrate, an app for building distributed decentralized systems. Centrifuge is known for being among the first protocols to have connected DeFi to real-world assets (RWA) on-chain, according to TechStory.

Having a means of exchange between Centrifuge and Ethereum, that being the WCFG token, puts DeFi/RWA harmonization that much closer within reach, but this is one extremely complicated bridge – built on Substrate, powered by Ethereum, bridged to Polkadot, reliant on relay chains – all of it still in development.

At the center of the activity is Tinlake, Centrifuge’s investment app. It acts as an open marketplace of real-world asset pools. Investors can look through the pools provided by Asset Originators and invest in the ones that work for them, according to Centrifuge.

Who created WCFG?

Centrifuge was created by a team that included Lucas Vogelsang who prior to that had founded the e-commerce company DeinDeal. Vogelsang and cohorts are also known for launching Taulia, a FinTech provider of working capital solutions (e.g. supply chain financing) deemed more suitable for the blockchain, eventually leading to the founding of Centrifuge. "We bring the procure-to-pay process to the age of distributed ledgers," Vogelsang posted on LinkedIn.

When was WCFG created and how much was it worth?

The Centrifuge protocol has been around since 2019. WCFG began trading in mid-summer of 2021, according to CoinGecko. At that time, WCFG was less than a dollar. It reached an all-time high of $2.55 on October 14, 2021, CoinGecko said.

How is the price of WCFG determined?

Using a common wrapped token structure, WCFG stands in for CFG on a 1:1 basis. Whatever trajectory CFG might take so too goes WCFG. Since Centrifuge is a protocol built for the tokenization of real-world assets, and various other DeFi applications, the direction of WCFG will be determined by whether these trends accelerate.

Why does WCFG have value?

CFG holders take part in governing the Centrifuge protocol as well as in staking and various reward-based incentives, according to Securities.io.

CFG is used to pay for transactions within Centrifuge. Node operators, minting non-fungible tokens (NFTs) that are used as collateral on Tinlake, are paid in CFG.

When CFG is converted to WCFG, holders retain exposure to the pricing of CFG, per Securities.io.

At the same time, WCFG holders gain the ability to interact with Ethereum-based dApps. 

What are the main benefits of WCFG?

• As just mentioned, using WCFG on Ethereum allows users to interact with DeFi apps that support ERC20 tokens and it can be held in an Ethereum wallet, Centrifuge says.
•  Centrifuge bridges assets like invoices, real estate and royalties to DeFi. The direction of WCFG, it bears emphasis, depends on the fate of CFG which is pinned in large part to more real-world assets finding their way to the Tinlake dApp. It’s promising in terms of its potential. Tinlake lets businesses/investors tokenize real-world assets, such as mortgages streams and other documented receivables, turning them into NFTs on the blockchain, so they can then be used as collateral for loans funded by smart-contract-facilitated Tinlake liquidity pools.
•  Cryptos launch wrapped versions of their tokens on Ethereum in large part due to the concept of interoperability, which becomes "a vital consideration for solutions that want to be taken seriously," Cointelegraph said.