Source: Cointelegraph Original: "{title}"
Decentralized finance (DeFi) is developing rapidly, but there is still a major financial component that is fundamentally missing: fixed income.
In the latest episode of "Hashing It Out," host Elisha Owusu Akyaw discusses with Brandon Goh, co-founder and CEO of Treehouse, why fixed income is crucial for the long-term stability and institutional adoption of DeFi.
Fixed income (including assets like bonds and savings accounts) is a pillar of traditional finance, but it has struggled to gain traction in the cryptocurrency space.
Goh stated that while DeFi has developed derivatives, lending platforms, and decentralized exchanges, it lacks a foundational benchmark interest rate similar to the London Interbank Offered Rate (LIBOR). Without standardized rates, promoting fixed income products in a decentralized environment becomes very challenging.
He mentioned that the industry has skipped an entire asset class, making it nearly non-existent in the current operation of DeFi.
The CEO of Treehouse indicated that creating a Decentralized Offered Rate (DOR) is one of the solutions to this issue, with DOR being an on-chain benchmark designed to enhance market efficiency and transparency.
Goh highlighted how Treehouse's model allows users to achieve predictable returns while reducing the risks associated with yield-generating products.
Later in the episode, the conversation explored how institutions might enter the DeFi space. Goh believes that large financial firms are unlikely to engage in high-risk DeFi strategies but may start with stable, transparent yield opportunities (such as yield farming).
A reliable fixed income market could serve as an entry point to help bridge traditional finance and cryptocurrency.
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Goh predicts that DeFi will shift towards sustainable growth rather than relying on unsustainable high-yield incentives. With increasing regulatory clarity and ongoing infrastructure improvements, fixed income could become a key pillar in the next phase of DeFi's development.
This episode delves into an important yet underdeveloped area of DeFi that could shape the industry's future in its quest for mainstream application.
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