Centrifuge RWA Proposal Discussion and Q&A

With the conclusion of the TEMP CHECK for our recent proposal (Aave Treasury Proposal: Onboard with Centrifuge Prime to invest in RWA) we wanted to continue the discussion and address many of the questions and feedback we received.

RWAs are a complex topic that all serious DeFi projects must gain expertise on now.

We want to use this post and the time before the ARFC to discuss the most commonly asked questions and provide guidance based on our experience working with RWAs. We encourage others to use this forum post as an opportunity to ask more questions about Centrifuge, Centrifuge Prime, and the approach taken for this proposal.

We will be hosting a community call to do a live Q&A and discuss these topics further, this Friday at 9am EST / 3pm CET.

You can join our Twitter space here!

Frequently Asked Questions

1. What is the legal setup in more detail and why is it important?

The legal framework provides a dedicated entity, controlled by the DAO, to handle the investment and operation of key services and functions related to RWA investments. This framework is the structure in use by Blocktower with MakerDAO, where it supports a debt ceiling of >1B USD and currently deployed capital of >600M USD. The documents that underlie that legal structure are public and can be found on the Maker forums here.

In more detail: The legal structure proposes a Caymans Foundation Company to be created on behalf of the DAO. The founding documents of the company establish that the company exists to execute the mandates provided to it by Aave token holders. Through this, the DAO can establish processes, activities, and guidelines that the company must adhere to, such as operating bank accounts, taking custody of tokenized and traditional custodial assets, submitting beneficial owner status, and similar necessary activities. The company ultimately can be integrated with Aave governance processes to follow token holder directions. The Company has an appointed director based in the Caymans and can appoint service providers to conduct activities on its behalf as necessary and approved by the DAO.

This legal structure is useful in that it relies on the well-known and experience Caymans legal structures, effectively allows the DAO to take ownership of assets it invests in, and provides the DAO with an entity that is capable of fully complying with KYC/AML regulations and similar regulations. This legal structure is resilient as it limits the vulnerability and exposure introduced by account intermediaries, is capable of adapting to many needs of the DAO over time, and has a proven track record of success.

The final legal structure, time to implementation, and overall framework is dependent on the activities desired by the Aave DAO. The final implementation will be built out collaboratively alongside the Aave community and be established only with Aave governance approval.

2. How do Centrifuge and the Aave DAO work together if this proposal is accepted?

This proposal enlists Centrifuge to set up the legal framework and make a one-time investment in the Centrifuge Liquid Treasury pool.

The legal framework is a general purpose framework which the DAO controls. Once it is set up, it means that money can be allocated from the Aave treasury into any RWA investment that Aave desires, safely and securely. The amount invested, request for redemptions, and additional investments/redemptions are ultimately left in control of the Aave DAO. The final ARFC will involve a detailed description of these processes.

This proposal allocates 1M of the Aave DAO Treasury stablecoins into the Centrifuge Liquid Treasury Fund.

We think it is most appropriate for the Aave community to consider this as a first step towards deploying into RWAs. The results of this proposal will establish the long-term RWA infrastructure for Aave (that can serve the treasury now and GHO in the future) and allow the DAO to become more familiar with the RWA industry and process. This proposal follows the current best practices for the Aave governance process.

3. What is the Anemoy Liquid Treasury Fund?

The Anemoy Liquid Treasury Fund is a fully onchain, actively managed Daily US Treasury Yield Fund. It is registered as a British Virgin Islands licensed Fund, open to non-US Professional Investors (Reg-S). The fund is balanced monthly, offering daily liquidity, holds US T-Bills with maturities shorter than 6 months, and is focused on minimizing interest rates and price risk. At 0.15% management fees and a redemption fee of 0.15% the Anemoy Treasury Yield Fund is one of the lowest cost US Treasury Fund offerings in DeFi today. The regulated BVI structure is bankruptcy remote and fully compliant; US T-Bills are held directly by the fund and the individual fund holdings are readily viewed onchain. Fund shares are held as tokens and investments & redemptions denominated in USDC.

Tokenized and issued through Centrifuge, investors and stakeholders will have full real time visibility into the underlying assets, the portfolio valuation, and the portfolio’s performance. Technical features that Centrifuge builds, such as external oracle pricing, cryptographic verification of holdings and accounts, and private data enrichment and aggregation will all be offered and integrated into the Liquid Treasury Fund.

More information on the fund itself can be found on the Centrifuge Governance forum here: POP: Anemoy Liquid Treasury Fund 1 - Pool Onboarding Proposals (POP) - Centrifuge Governance Forum

4. Would a GHO Facilitator be the better RWA solution?

While we fully agree that a GHO credit line is an optimal solution for RWA exposure, it is not the only relevant solution. The credit line has the benefit of allowing the best use of the Aave balance sheet, directly provides backing to GHO, and overall positively impacts GHO liquidity and other objectives. However, GHO is not yet ready to allocate to RWAs, the treasury is currently losing money on idle stablecoins, and the DAO still needs to get comfortable with the RWA industry and processes. This proposal serves the existing needs of the community while supporting the long-term vision of a GHO facilitator.

The process for developing the expertise, legal framework, and process for RWA investments can be lengthy and costly. This proposal provides a cost-effective solution that can begin now. This will allow the DAO to be prepared for when GHO will be mature enough to support an RWA facilitator. The legal setup, the assets, and the process and learnings developed here can be utilized as part of the GHO facilitator.

5. How does this proposal fit into the broader topic of how the Aave DAO manages its treasury? Shouldn’t the Aave DAO need a robust treasury management function first?

Ultimately this proposal does not stipulate any constraints on treasury management. The DAO effectively manages the treasury today and this proposal does not change that. The DAO retains control over the investment in the fund and can change it at any time.

The setup in this proposal can be used as a tool in a future treasury management approach voted on by the DAO and Centrifuge will work with the DAO to incorporate RWAs into this strategy.

This proposal is extremely cost effective in the current rate environment. A conservative estimate says that at 1M dollars, the proposal will recoup all costs and begin accruing profit after 12 months.

Special thanks to all those involved with the conversation so far @Flipside @lbsblockchain @MarcZeller @Michigan_Blockchain @PennBlockchain @Kene_StableLab @WintermuteGovernance @HKUST_EPI_BLOCKCHAIN @0xkeyrock.eth @BlockchainAtColumbia

Please join our Twitter space this Friday to participate in the conversation!

We’ll continue to keep this FAQ updated as the discussion evolves.


Commenting as an outside RWA observer who is closely following this proposal. I am not involved with Aave, so excuse any questions that have obvious answers.

What is the advantage to Aave DAO allocating stablecoins to an off chain solution vs utilizing their own lending platform, where they have real-time reporting and full control?

Can Centrifuge comment on why this structure and jurisdiction are the ones being proposed? It is the newest of the RWA structures used at Maker, and has not had the benefit/misfortune of being tested or iterated upon at Maker since it is still in the ramp-up process (50m was added to it this week).

Does Aave governance have qualified legal advisors that have reviewed this structure and jurisdiction to make sure it fits the specific needs of Aave? Those needs may or may not be the same as at MakerDAO.

Has Aave governance decided it wants to do off chain treasuries specifically? If so, is there a reason why Aave governance doesn’t put up a Request For Proposals to get competitive bids?

Has Aave governance attempted to estimate startup and ongoing costs, which cut into yield? This has been a major blindspot at Maker for RWAs, with the largest offchain RWAs returning very, very low yields to the protocol to date.

Where can Aave voters see the prospectus of the Anemoy Liquid Treasury fund? What is the maturity profile of the underlying assets (because this will inform how much interest rate risk there is), and why choose a fund that has a redemption fee vs publicly traded US Treasury funds or directly holding short-term Treasury bills (which is what this structure does for Maker)?

Looking forward to the Q&A tomorrow!


Great questions Paper - good to see you here!

The Aave treasury already has stablecoins invested in the Aave markets. However DeFi lending rates are far below current US Treasury yields and the Treasury is therefore missing out on potential revenue. The legal structure (more on this later) does give Aave full control and the proposed solution does give Aave near real-time (daily) reporting on their RWA allocation.

The Trust structure is used to back both companies that invest into Clydesdale and Andromeda vaults in Maker. This is based on our research in the Maker community from over a year ago. The specific deal you mention has already allocated a 1.2B USD debt ceiling to this arrangement and has already accumulated 600M USD of assets. The Blocktower MIP6 vault uses this same Caymans company to support another ~170M USD of private credit assets and the same structure is used for the recently launched New Silver vault for another 50m debt ceiling for real-estate lending.

This proposal will have obtain external Cayman counsel for Aave to work with us on implementation of the structure.

Centrifuge has been a long time partner of Aave going back to 2020 with the work on the RWA Market. We’ve developed this legal structure as a template to be used by other DAOs such as Aave. Through our knowledge and expertise, we believe we can be a contributor that can guide communities in how to implement RWA infrastructure efficiently and deploy capital safely.

We are fully supportive of following the RFP process when it is ready. Our previous engagement with the DAOs core contributors, its active voters, and even the response to this Temp Check indicates Aave would like to integrate with real world assets. Centrifuge is already one of the oldest RWA protocols still active today and has years of experience working on solutions like this with DAOs such as Maker and Aave.

We are confident that we will be competitive and do well in an RFP process. We’d be happy to participate in a future treasury strategy that revolves around this.

To be clear, as with any Centrifuge pool, this will be an onchain offering, where each underlying asset will be tokenized and issued through an onchain investment offering. Given the current market context, US treasury bills are the most relevant assets to discuss.

Maker’s unique governance structure and community have created a lot of opportunities for others to learn from. This proposal reflects Centrifuge’s experience working inside the Maker community on these exact issues. The start-up costs are kept minimal, capped at 50k USD, and the overall fee structure of the solution is very streamlined.

As mentioned in the original proposal and again here, at current rates, the current investment approach will cover all of the startup costs here within 12 months at current rates. This is incredibly cost-effective and risk-reduces this proposal significantly.

More info on Anemoy has been linked above in the forum post and Anemoy will share more information here in a follow up.

It’s important to note that the differences in the structures you mentioned are quite large. A majority of Maker’s RWA investments are entirely off-chain structures that are akin to segregated managed accounts. Without the significant management work of the resources Maker employs, these deals on their own impose high costs and very little transparency, with the benefit of being very customizable to Maker’s needs. They require Maker to directly onboard with exchange agents, custodians and prime brokers which can take months of time and cost hundreds of thousands of dollars. Anemoy, as a fund offering, is taking care of these responsibilities and can simply accept USDC from Aave.

Here, the legal framework implemented by Centrifuge Prime provides a similar level of adaptability to Aave’s unique needs and desires, while the Anemoy LTF itself is a highly transparent and cost-effective onchain opportunity.

Thanks for the good questions @PaperImperium, we appreciate the opportunity to elaborate on this topic.


We’ve had to reschedule the RWA Q&A on Spaces for next week. We’ll share back here shortly with an updated date and time!

Hey all,

…and @PaperImperium, nice to see you here. Glad you haven’t lost your zest for in-depth RWA engagement :)

Martin here from Anemoy Capital. I am also an active Centrifuge DAO contributor and Centrifuge co-founder. Here is our Anemoy Liquid Treasury Fund 1 deck. Please notice its disclaimer, which is also covering the following text I’m posting here.

The Anemoy LTF aims to be a purpose-built offering combining onchain lowest possible risk with fast liquidity and low fees. Centrifuge as the tokenization and issuance protocol offers programmable DeFi-native integration.

The LTF will ultimately provide an onchain RWA product that offers:

  • Real-time transparency: Each position in the portfolio is tokenized and represented onchain, allowing for near real-time transparency into the portfolio’s overall status. Integrations with price oracles, onchain verifications, and programmable execution allow this to be the most transparent product in the market today.

  • Legal recourse and investor protection: The offered token is an actual fund share using the ability to tokenize a fund in the BVI. The token itself gives ownership. Token holders have direct claims to the underlying assets in the fund, (T-Bills US treasuries). The combination of owning a share of a BVI-regulated fund with all AUM (T-Bills US treasuries) being held by a regulated US custodian and traded through a registered US prime broker offers investors best in RWA recourse and protection. The fund can facilitate redemptions-in-kind should it ever be requested.

  • Low fees: Unlike most other offerings, the fund holds T-Bills directly, saving investors fees charged by the ETF issuers or other intermediaries.

Thank you and looking forward to discussing it in detail with the community!


As described, this would definitely be superior to existing solutions at Maker. I would recommend also finding a way to tokenize or otherwise reconcile daily the cash balance.

Experience has shown that the cash balance is where reporting is prone to breaking down. Not being able to see the cash balance leads to uncertainty about how much cash is actually in the vehicle (and so you have an uncertain NAV), unexpectedly high expenses to service providers (banks, brokers, trustees, or anyone else who gets a cut), uncertainty about the net yield, and lack of awareness when large sums of cash are left idle rather than being rolled over. If you can make sure the cash - perhaps less some small, well-defined reserve for service expenses - is as transparent as the bills, that is ideal.

This is good, and also a likely improvement over some of the solutions elsewhere. Would these funds be owned by Aave DAO or the Cayman Foundation Company, though? Presumably the latter, which means Aave DAO should feel absolutely comfortable that it controls the foundation company. Having the off chain entity that is “controlled” by the DAO act in unexpected ways is an unpleasant surprise. This can be done correctly, and I have no specific critiques here except that Aave governance should consider keeping very very tight control over the foundation company, or all the benefit of the foundation company’s rights to the funds in Amenoy will be lost. This risk exists no matter who (if anyone) Aave chooses to utilize, and is not unique to this proposal.

I suppose a question I ask myself here, and perhaps there’s a very compelling answer that’s never surfaced at Maker, is: Once the funds are owned/controlled by the foundation company, what is the purpose of not just having the foundation company itself open an account at Vanguard or Wedbush or wherever and buy/roll the bills? What does the insertion of a fund between the foundation company and the broker + custodian provide?

Overall, the deck linked and the proposal as I understand it present an understanding of some of the pain points of similar arrangements at Maker. That’s really good. I actually think this proposal might be well received at Maker, since it would present a possible upgrade to some of the existing structures.

For Aave, however, it might be a good idea to first, decide if Aave prefers higher off chain yield vs the trade off of withdrawing liquidity from their own platform and relinquishing some level of control.

If it decides that yes, it should diversify with off chain holdings, it would still be best practice to put out a competitive bidding process. Maker did not do such a thing, and as a result it sadly doesn’t have a structure as described here.


thanks for the feedback!

As described, this would definitely be superior to existing solutions at Maker. I would recommend also finding a way to tokenize or otherwise reconcile daily the cash balance.

I’ll check with the Centrifuge team. Cannot more than agree :slight_smile:

Would these funds be owned by Aave DAO or the Cayman Foundation Company , though?

Your guess is right. It would be the Cayman Foundation Company but its statutes would give the DAO full control, meaning the local director is instructed to do what the DAO with onchain governance is asking for.

As an extreme example if the DAO wants to redeem their entire investment using the offchain legal framework and not relying on Anemoy it can instruct the local director to execute a redemption in-kind with the serving custodian (Redemption: Definition in Finance and Business > In-Kind Redemptions) with a token vote.

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New date up for our Twitter spaces up and live! We wanted to accomodate some delegate schedules better and hopefully get some representation from the Aave community able to speak and share their thoughts.

Tuesday, September 5th, at 10am ET / 4pm CET. Set your reminders!

We’re looking forward to continuing this discussion with the community.

Congratulations to the Centrifuge team on the approval of the temp check. This is an important milestone for the DAO and paves the way for a continued conversation.

We fully support the creation of an entity and believe that it will be critical to the DAO in many future activities.

In regards to this RWA proposal, we have deep respect for Centrifuge (they are a pioneer in this space) but there are now several products in the market. We propose a structured approach to evaluating each in order to identify those that align best with the DAO. In full disclosure - Hashnote (where I am a cofounder) has a private cash fund that we believe should also be considered.

To that end, we have posted this outline of what we believe could be the DAOs next steps.

In 4, I do not understand why it says that the treasury is currently losing money with idle stablecoins. stablecoins are USDC, not GHO, so it has no interest rate. Do you mean that we loose the oportunity of buying bills so we don’t make those 5% or it’s something else?

Hi all, firstly thanks Khan for opening this discussion to diversify AaveDAO’s treasury to RWA. It is ever so important to seek out yield opportunities, as to protect our funds from inflation, and rwa such as tbills provide a decent yield relative to its risk.

Many great points raised by the community from Paper, and I agree to most of them. A competitive bidding process would be the ideal way forward as there are a few RWA alternatives out there, with their pros and cons. It would be greatly prudent to have such options available to Aave DAO to make the most informed decision in the allocation of funds.


Apologies to everyone who tried to join our Twitter Spaces earlier. Although Lucas, Stani, Martin, and myself where available - there where technical issues where only speakers where able to listen.

The Spaces was recorded and we did share more information on the proposal, Anemoy, and RWA in general - so check out the link below to see the carnage yourself!

Meanwhile, we’d like to continue the Q&A in this thread. The discussion has been great and continues to be useful, so please keep it coming.

Indeed it’s the opportunity cost of holding idle stablecoins and foregoing yield. Especially when compared to the credit risk US treasury bills versus other stablecoin-yields, there is a significant upside to allocating to some US treasury exposure.

I’d like to make you aware that we (Anemoy) are having our pool party today with the Centrifuge DAO hosted by Centrifuge governance. I hope you can join and sorry for late notice.

Pool Party Details
7th September, 17:00 CEST / 11AM EDT
Google calendar event

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