The DeFi market is rapidly expanding, but the lack of fixed income limits its appeal to institutional investors.
Challenge: DeFi Lacks a Standardized Rate
One of the primary challenges in integrating fixed income into DeFi is the absence of standardized interest rates akin to LIBOR in traditional finance. This absence impedes financial institutions from assessing risks and returns. Brandon Goh, CEO of Treehouse, highlights the need for an on-chain benchmark rate, the Decentralized Offered Rate (DOR), to enhance transparency and predictability.
Treehouse’s Vision: Introducing Fixed Income
Treehouse, a DeFi analytics and yield management platform, is working to introduce fixed income to decentralized finance. The project aims to provide stable returns and reduce volatility through structured fixed-income products.
The Role of Institutional Investors in DeFi's Future
Despite DeFi's advancements, institutional players remain cautious due to regulatory uncertainties and high volatility. However, Brandon Goh believes fixed income can attract them into the crypto space. It is suggested that institutional investments might start with low-risk offerings.
While DeFi revolutionizes financial services, the lack of fixed-income products limits its appeal to institutional investors. Treehouse's approach might provide the necessary financial predictability, opening new avenues for DeFi expansion.
