Decentralized finance (DeFi) has evolved rapidly, but one major financial component remains largely absent: fixed income.
In the latest episode of Hashing It Out, host Elisha Owusu Akyaw speaks with Brandon Goh, co-founder and CEO of Treehouse, about why fixed income is essential for DeFi’s long-term stability and institutional adoption.
Importance of fixed income
Fixed income, which includes assets like bonds and savings accounts, forms the backbone of traditional finance, yet it has struggled to gain traction in crypto.
Goh says that DeFi has developed derivatives, lending platforms and decentralized exchanges but lacks a foundational benchmark rate akin to the London Interbank Offered Rate (LIBOR). Without standardized rates, scaling fixed-income products in a decentralized environment becomes difficult.
He says the industry skipped an entire asset class, making it almost non-existent in the way DeFi currently operates.
“So in our view, why that is the case is because there’s missing infrastructure. There’s particularly missing benchmark rates. And if you don’t have this foundational layer, it’s very hard to have a solid fixed income asset class.”
Onchain benchmarks
Creating a decentralized offered rate (DOR), an onchain benchmark designed to improve market efficiency and transparency, is one way to troubleshoot this issue according to the Treehouse CEO.
Goh highlights how Treehouse’s model allows users to earn predictable returns while mitigating risks associated with yield-generating products.
Later in the episode, the conversation explores how institutions might enter DeFi. Goh argues that large financial players are unlikely to engage in high-risk DeFi strategies but may start with stable, transparent yield opportunities such as staking.
A reliable fixed-income market could serve as an entry point, helping bridge traditional finance and crypto.
Related: Despite Bitcoin price volatility, factors point to BTC’s long-term success
Goh predicts that DeFi will move toward sustainable growth rather than relying on unsustainable high-yield incentives. As regulatory clarity increases and infrastructure improves, fixed income may become a key pillar of the next phase of DeFi’s evolution.
This episode provides insights into a crucial but underdeveloped area of DeFi that could shape the industry’s future as it seeks mainstream adoption.
Listen to the full episode of Hashing It Out on Cointelegraph’s podcast page, Spotify, Apple Podcasts or your podcast platform of choice. And don’t forget to check out Cointelegraph’s full lineup of other shows.
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