Bhaji Illuminati on How Centrifuge Became Coinbase's Tokenization Partner

**Robbie** (0:00)
Welcome to episode number 31 of Stabled Up, our premier weekly stablecoin and tokenization show powered by our friends at Frax with their FRXUSD product. Check out frax.finance to learn more. Today we have Centrifuge CEO Bhaji Illuminati. Bhaji, welcome to Miami. Welcome to the show.
Great to have you.

**Bhaji Illuminati** (0:18)
Great to be here.

**Robbie** (0:19)
Big news today. Congratulations.

**Bhaji Illuminati** (0:21)
Thank you. Thank you.

**Robbie** (0:23)
How are you feeling?

**Bhaji Illuminati** (0:24)
Very excellent. It's been a long time in the making. We actually announced today that Centrifuge was selected as a preferred tokenization infrastructure for Coinbase. So we've been working closely with... We actually launched our first products on base three years ago. Had Jesse Pollock at our RWA summit when they had just launched base. So we've been a very early supporter of the base ecosystem. And it's incredible to see it really come full circle, where now we're collaborating with them on what does tokenization look like to not just bring assets on chain, but to integrate them into DeFi and to make them usable and to really grow them and bring them to the same level as other crypto assets that folks are used to interacting with on chain.

**Robbie** (1:09)
Yeah.

**Andy** (1:10)
So yeah, go ahead.

**Robbie** (1:11)
I just remember they did that Coinbase change everything thing like last October, I think that this big event and they spoke about they were launching a tokenization platform and that it was going to be a big focus for them going forward. So congratulations there.

**Bhaji Illuminati** (1:27)
Yeah, the system update where Brian Armstrong ended it by talking about Coinbase Tokenize.

**Robbie** (1:32)
Yes.

**Bhaji Illuminati** (1:32)
Left a lot to the imagination. So we're very excited that this is the first big announcement they did around their push into tokenization.

**Robbie** (1:39)
Well, the tokenized treasury market is specifically growing a lot.
You guys have a product there that is in the billions in TVL. There's quite a handful of leaders. It's kind of yet to be decided who's going to be the fastest horse, but it's a race. It's a full on race.
I'm just curious to review, let's start with the treasury market. How do you kind of view the tokenized treasury market right now? Obviously, we've been in a world where stable coins have been a massively revenue generating business from just a standpoint of earning the interest from yields in treasuries and in money markets and keeping that and basically just growing a massive business. Tokenized treasuries are passing that yield back to their users. These users are more sophisticated investors coming on chain to purchase these products. What is your kind of lay of the land of the tokenized treasury market now?

**Bhaji Illuminati** (2:33)
Yeah, I'll say the market now is all about deeply liquid and fast duration, T0 or T1 products. So that has been T-bills. Another product that we have alongside our T-bill product is AAA CLOs, which is about 200 basis points above the risk-free rate. And we're seeing a similar buyer, which is primarily stable coins and on-chain allocators who want that enhanced cash product coming into both T-bills and that AAA CLO product. So we've started really packaging them together, where you have the liquidity profile that's needed for on-chain markets, and you have a slightly higher yield. So it hedges some of the risk of when the T-bill rates start to go down. On-chain markets are, there's still a huge demand and a huge growth driver, both for products like stable coins that want to manage their reserve with the safest, most stable assets, but then also vaults and DeFi protocols that want to construct better products. So that might mean having T-bills as the liquidity buffer, having AAA as the yield floor, so that there's always an allocation into T-bills that can come in and out instantly. And then, with JAAA as the yield floor, when crypto rates are volatile and they come down, they never go below JAAA. So they would just swap into JAAA, and you would have at least always a 5% yield.
So that's some of the work that we're doing on chain in terms of integrating these products throughout the broader ecosystem.
And there's a couple iterative steps that make them even better. So, for instance, we are changing our T-bill fund from T plus one, so we update the NAV daily, but it can take a day to redeem, to iNAV, so instantaneous NAV, any second throughout the day. That makes it a lot easier for these atomic protocols that need to be able to swap in and out to get that real-time NAV. We're also adding a liquidity facility that will be announced in the next couple weeks. That's a very large scale, largest that the industry has seen. And what that allows is that we're able to work with Janice Henderson, our partner for the T-bill fund, and they're now selling this money market fund to their traditional clients. So having a money market fund that is instant liquidity at such a deep level becomes a better option than what they currently have. So it's the same product except better.