Introducing Chateau: Private Capital Markets on DeFi

Chateau team
4
min read

CHΛTΞΛU is a new DeFi protocol that aims to unlock trillions of dollars worth of assets in the private capital markets and bring them on chain.

Linking DeFi to Real World Assets has been a fundamental challenge in the cryptocurrency industry since its inception. Many past and current attempts are encumbered by challenges around origination, custody, management, and legal compliance.

‘Real World Yield’ protocols such as Maple.finance, TruFi, and Goldfinch are “CeDeFi” protocols that bring exposure to debt instruments through the protocol's company acting as the centralized intermediary. This model has successfully originated close to $5 Billion in debt since inception, proving there is immense market demand for Real World related exposure on chain. Yet making the step from Debt to Equity and other financial instruments present complex issues and tradeoffs.

With CHΛTΞΛU, we believe we’ve made the critical breakthroughs required to create liquid, global markets for all asset types. Powered by a reg S offering framework designed for minimal regulatory burden, and built on the latest blockchain infrastructure, CHΛTΞΛU combines the best elements of Traditional Finance (TradFi) and Decentralized Finance (DeFi) to deliver a new Internet Financial System

Some might pontificate as to whether we need a new financial system, but we believe the opportunity is obvious: DeFi is a 10X improvement over Traditional Finance in terms of speed, accessibility, and cost.

Smart contract based issuance enables rapid investment and capital formation across the internet. Stablecoins lower the barrier of entry and enables the subsequent distribution of financial instruments and price discovery on a global scale. While composability opens up an infinite universe of possibilities with regards to use cases.

The article below lays out our journey to reach this point and our vision for the future.

The Current Shortcomings of DeFi

In 2017, DeFi burst on the scene with exciting new use cases ranging from Decentralized Exchanges (like UniSwap) to Borrow/Lend Protocols (like Compound). In just a few short years, DeFi TVL exploded from nothing to over $180 Billion in Total Value Locked (TVL). However, this TVL came crashing down in 2022 after a series of implosions that began with Luna, 3AC, and eventually, FTX.

DeFi has remained somewhat stagnant in the interim, especially as the U.S. began imposing archaic regulatory regimes on cryptocurrency.

The main issues facing DeFi today are:

1. Unattractive Returns: An examination of DeFiLlama's yield rankings reveals that most leading projects are yielding an average of 3-5%. This yield is not sufficiently competitive, especially with short-term U.S. treasury bills yielding ~5%. While some may argue that higher yield pools exist, these often come with a poor Sharpe ratio or yield payout in highly volatile tokens, or have limited capacity.

2. Limited Variety: Despite making significant progress in expanding stablecoin volumes and introducing lending markets on-chain, DeFi is still far from achieving parity with TradFi.

For instance, only $595 million of the $1.4 trillion U.S. private credit market is currently in active loans. Similarly, the $440 billion venture capital industry remains largely inaccessible to most investors, particularly those outside the U.S. Not to mention the derivatives market in the quadrillions.The lack of quality equity and debt instruments on-chain limits DeFi holders' ability to build a diversified portfolio with a high Sharpe ratio.

RWAs - The Holy Grail of DeFi

CHΛTΞΛU is building a crypto native Internet Finance System by building technological and legal frameworks that unlock access to trillions of dollars in Real World Assets On chain.

Compared to legacy finance, CHΛTΞΛU has the following advantages:

-Fractional investment in institutional products with DeFi enabled liquidity

-24/7 Global access with low barriers to entry

-Composable RWA tokens: DeFi lending markets, derivatives, perps and fundraising platforms can be built around our ERC tokens.

-Light Touch Legal frameworks  that can scale into more product offerings: Equities, Stablecoins, Commodities, Derivatives and more with minimal regulatory overhead

Pioneering a New Approach

CHΛTEΛU enables 3 key innovations that we believe will differentiate us in the RWA space:

(i) Simple Compliance Framework

Let’s first address the elephant in the room: US Security Regulations.

While direct US offerings are regulated by SEC issuance rules, non-US products, including derivatives, may be issued by offshore entities to offshore investors without obedience to US-based compliance standards. 

CHΛTEΛU is focused on launching our offerings via Regulation S. This puts us in stark contrast to other players who choose to go the Reg A or Reg D route that limits the amount of each offering and imposes transfer limits. These rules, written in 1946 before transistors and mobile phones, cripple any DeFi product built to comply with their archaic demands.

(ii) Curated Offerings

RWA offerings are only as attractive as the real world assets that underpin them. We leverage our combined decades of experience + connections across Wall Street and Silicon Valley, to source exclusive deals.

Our debt, equity, and derivative offerings offer attractive upside, while also providing a strong Sharpe ratio, by being backed by proven operators and businesses.

(iii) Fully Composable Tokens

Each CHΛTEΛU Debt.D and Equity.Ξ offering is issued as a fully composable ERC token. These tokens can then be leveraged across any DeFi product.

For instance, if you want to sell your tokens before the redemption window, you can on a decentralized exchange. 

You can also leverage CHΛTEΛU tokens as collateral in a borrow/lend protocol. The opportunities are endless.

Join Us On Our Journey

We’re excited to announce that we are now offering the best yielding Debt asset in DeFi, with an APY of 15% and high Sharpe ratio.

If you are interested in receiving the full investor deck and reserving tokens via OTC, please contact us at: contact@chateau.capital 

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