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Untangled Launches Tokenized RWA Platform with $13.5M Funding for On-Chain Private Credit

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Oct 12, 2023 at 09:18 am

Fasanara Capital, a London-based asset management company, spearheaded the investment round and introduced two exclusive tokenized credit pools on the platform.

Untangled Finance, a marketplace focused on tokenizing real-world assets (RWA), has officially made its debut on the Celo network. This significant step forward comes on the heels of a successful venture capital infusion of $13.5 million, with the aim of revolutionizing the tokenization of private credit on the blockchain, according to a statement released by the company to Bitsday.

The primary backer, Fasanara Capital, a distinguished asset management firm headquartered in London, not only furnished substantial funding but also launched two credit pools on the platform. These pools play a crucial role in overseeing off-chain operations and handling the underwriting of loans.

In a bold move towards expansion, Untangled has outlined plans to broaden its scope to encompass Ethereum (ETH) and the layer 2 network Polygon (MATIC) through the utilization of Chainlink’s (LINK) Cross Chain Interoperability Protocol. This strategic maneuver is set to transform the platform into a multichain and interoperable RWA credit protocol.

This milestone comes at a juncture when asset tokenization is emerging as a crucial growth driver within the digital asset sector, which is still recuperating from a challenging bear market and the high-profile collapses witnessed last year. Tokenization essentially involves the conversion of conventional financial assets like credit, real estate, or bonds—often referred to as real-world assets—onto a blockchain.

A report by Bernstein earlier this year projected that the market for tokenized assets could potentially burgeon to $5 trillion in the next five years. This trajectory of growth is expected to usher in operational efficiencies, enhancing liquidity and accessibility for investors and asset managers.

Tokenization of private credit markets

Untangled's core mission is centered around the tokenization of private credit markets. Presently, the traditional private credit market exceeds $1 trillion in size. However, within decentralized finance (DeFi) platforms, the total asset value in private credit amounts to a modest $550 million, as indicated by data from rwa.xyz.

Co-founded by Manrui Tang and Quan Le, Untangled places a strategic focus on fintech lending, encompassing activities like invoice financing and consumer loans based on salary advances. Additionally, the platform ventures into the realm of "green assets," which involve providing working capital or development loans for eco-friendly infrastructure projects, such as battery swapping stations.

Untangled provides the necessary infrastructure to host blockchain-based credit pools. Here, investors—certified investors, firms, and decentralized autonomous organizations (DAOs)—deposit funds for lending purposes, thereby earning a yield. In return, depositors receive an ERC-20 token representing their positions.

What sets this platform apart within RWA lending protocols are several innovative features. This includes an integrated liquidation engine, which may conduct auctions of specific collateral assets to strengthen the overall health of the pool should it fall below a predetermined threshold. Moreover, the company has developed a forward-looking credit assessment model designed to monitor the borrower's potential default risks. Additionally, the protocol offers an auction-based withdrawal mechanism for investors seeking early exits from the pools.

Francesco Filia, CEO and CIO of Fasanara Capital, emphasized:

 "We foresee an imminent convergence of two worlds. On one side, fintech lending, which addresses the gaps in underserved SME and consumer markets, and on the other, the way values are being transacted within the new realm of digital assets."

Read more: DAO Governance and Staking Pools: Vitalik's Insights

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