Hedera Expands Real-World Asset Utility as cSigma Channels Invoice Financing Returns to Stablecoin Holders
- Hedera and cSigma turn blockchain into a tool for the global economy, benefiting stablecoin holders.
- cSigma picked Hedera for its focus on RWA utility, Cost Predictability, Legal Recourse, and Unified Access.
The Hedera (HBAR) network has expanded real-world asset (RWA) utility through an integration with cSigma Finance. According to the Hedera Foundation, cSigma brings invoice financing to stablecoin holders. The Hedera Foundation explained that with cSigma, yields in the Hedera decentralized finance (DeFi) ecosystem are now tied to real-world economic activity.
Rather than trying to become the single centralized storepoint for lending, cSigma Finance is taking a different approach. The platform aims to build the Shopify of institutional asset tokenization on Hedera.
According to the Hedera Foundation, cSigma has built a complete technology stack. It allows independent asset originators like credit funds, fintechs, and supply chain financiers to spin up their own tokenized portfolios on-chain.
Hedera and cSigma partners | Source: Hedera Foundation
In traditional finance (TradFi), there is a mountain of operational friction when a specialized credit fund wants to lend to logistics companies. There are usually challenges with setting up SPVs, managing legal compliance across jurisdictions, and manually reconciling payments.
To solve these issues, cSigma has provided the “merchant” experience for asset originators. This is similar to how Shopify gives a merchant the tools to sell products without building a server farm. As regards cSigma, it provides financial originators with the tools to deploy capital without building a blockchain engineering team.
cSigma provides infrastructure for asset originators to tokenize real-world debt portfolios as on-chain products. Lenders deposit stablecoins like USDC into pools, earning yields primarily from borrower interest. Notably, cSigma handles the heavy lifting by converting legal claims into digital assets and through automated KYB/KYC and whitelisting. The platform also connects to stablecoin pools seamlessly.
Summarily, cSigma captures real-world economic value often generated from invoices and purchase orders. It also bridges loans and passes them through to stablecoin holders. As the Hedera Foundation explained, cSigma, with its over $80 million collateralized and legally enforceable debt obligations, is bringing real economic value to the network.
Why Did cSigma Choose Hedera?
cSigma recognized an issue with many RWA projects launching on chains optimized for retail trading, only to struggle to attract institutional volume.
Recognizing this challenge, cSigma said it chose Hedera for marketing and three critical operational necessities. This includes Cost Predictability, Legal Recourse, and Unified Access. Institutional credit is high-frequency, generating thousands of repayment transactions per month. On a network like Ethereum, a sudden spike in gas fees could wipe out the margin on a repayment.
This is in contrast with Hedera’s fixed fees, which allow originators to forecast costs with 100% accuracy. Additionally, the Hedera Governing Council comprises entities like Google, DLA Piper, and IBM. They provide a layer of enterprise-grade trust and stability that anonymous, decentralized chains cannot match.
This governance structure mitigates the counterparty risk of the network itself for a bank or credit fund. Hedera is known for its unique features in the market. As we covered in our earlier news piece, Hedera and Axelar recently teamed up to open access to 60 blockchains.
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