Untangled Finance has launched on the Celo network, introducing its Tokenized Real-World Asset (RWA) marketplace, after securing $13.5 million in venture funding. This move aims to bring tokenized private credit onto the blockchain, as revealed to CoinDesk.
Leading the investment round was the London-based Fasanara Capital. The firm has also initiated two credit pools on Untangled's platform, overseeing off-chain activities and the underwriting of loans.
Furthermore, Untangled is set to branch out to Ethereum (ETH) and Polygon's Layer 2 network (MATIC) through Chainlink's (LINK) Cross Chain Interoperability Protocol. This will position the platform as a multichain and interoperable RWA credit system.
This move highlights the growing interest in asset tokenization in the digital asset sector, despite challenges from the recent bear market and notable setbacks from the previous year. Tokenization involves the representation of traditional financial assets - like credit, real estate, or bonds - as digital tokens on a blockchain.
According to a report by Bernstein earlier this year, the market for tokenized assets might surge to $5 trillion within the next half-decade. This growth promises enhanced operational efficiency, and increased liquidity and access for both investors and asset managers.
Untangled is targeting the integration of the conventional private credit market, valued at over $1 trillion, into blockchains through tokenization. As per data from rwa.xyz, decentralized finance (DeFi) currently hosts a mere $550 million in private credit assets.
Untangled offers a platform for creating credit pools on the blockchain, allowing accredited investors, companies, and decentralized autonomous organizations (DAOs) to deposit money for lending and earning returns. In return, depositors are given an ERC-20 token signifying their stake.
The co-founders highlighted several unique features of Untangled in the realm of RWA lending protocols. For instance, it incorporates a liquidation mechanism that can sell off specific collateral assets to enhance the pool's stability if it drops below a set level. Additionally, Untangled employs a proactive credit evaluation system to track potential future risks of borrower defaults. For investors seeking an early exit from the pools, the platform also provides an auction-based withdrawal process.
“On one side, fintech lending which fills the gap in underserved SME and consumer markets and, on the other, the way values are being transferred within the new world of digital assets.”
