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Untangled Finance, a marketplace specializing in tokenized real-world assets, began its operations on the Celo network after successfully raising $13.5 million in venture capital. This recent move aims to introduce tokenized private credit into the world of blockchain, as revealed by the firm.
Fasanara Capital, a reputable asset management entity situated in London, took the lead in this investment. Moreover, they've initiated two credit pools on Untangled's platform, overseeing off-chain tasks and directing loans.
Furthermore, Untangled disclosed its future ambitions to broaden its horizons to other platforms like Ethereum and Polygon's layer 2 network, leveraging Chainlink's Cross Chain Interoperability Protocol. Such a move will evolve the platform into a comprehensive and interoperable credit protocol that encompasses various real-world assets.
The digital asset sector has identified asset tokenization as a pivotal avenue for growth, especially considering recent market downturns and notable industry challenges from the previous year. Essentially, tokenization allows conventional financial assets, such as real estate, bonds, and credit, to integrate with blockchain technology.
A forecast by Bernstein earlier this year projected the potential growth of tokenized assets to reach a value of $5 trillion within the upcoming half-decade. Such growth is anticipated to streamline operations and bolster liquidity and accessibility for both investors and those managing assets.
Untangled's core mission revolves around integrating the expansive private credit sector, currently valued over $1 trillion, with blockchains via tokenization. In contrast, the present value of private credit in the decentralized finance sector amounts to just $550 million, as per data from rwa.xyz.
During a conversation with CoinDesk, Untangled's co-founders, Manrui Tang and Quan Le, highlighted the platform's primary focus on fintech lending. They elaborated on areas like invoice financing, salary advance-based consumer loans, and green assets, including developmental loans for green projects like battery swapping outlets.
Untangled's unique platform facilitates the establishment of blockchain-oriented credit pools. Here, entities like certified investors, businesses, and decentralized autonomous organizations deposit their funds, aiming for profitable returns. In return, depositors secure an ERC-20 token symbolizing their investments.
Another notable feature is Untangled's proactive approach to maintaining the credit pools' health. If the pool's status diminishes past a set limit, the platform's built-in liquidation system may auction some collateral assets. Additionally, the firm developed a credit evaluation model that keeps tabs on potential default risks of borrowers in the future. For those wishing to leave early, there's also an auction-based withdrawal procedure.
Francesco Filia, the CEO and CIO of Fasanara Capital, observed a convergence between fintech lending addressing the needs of SME and consumer segments, and the evolving landscape of digital asset value transfers.
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