DeFi stability hinges on fixed income

Treehouse CEO Brandon Goh believes that fixed income could be DeFi's missing link to wider adoption, particularly among institutional investors.

In a recent episode of Hashing It Out, Goh emphasised the importance of fixed income for DeFi’s long-term viability.

Fixed income assets, such as bonds and savings accounts, provide predictable returns and play a crucial role in risk management in traditional finance.

However, these products remain largely absent in DeFi.

Goh noted that while DeFi has developed derivatives, decentralised exchanges, and lending platforms, it still lacks the core infrastructure needed for fixed-income products.

He argued that the absence of benchmark rates is a major barrier to fixed-income development in DeFi.

“If you don’t have this foundational layer, it’s very hard to have a solid fixed income asset class,” Goh explained.

This lack of infrastructure makes it difficult for DeFi to provide consistent and reliable returns similar to traditional financial products, limiting adoption.

As a potential solution, Goh proposed the creation of a Decentralised Offered Rate (DOR), an on-chain benchmark designed to enhance market efficiency and transparency.

He highlighted how Treehouse’s model incorporates this approach, helping users earn predictable returns while minimising risks associated with yield-generating products.

Goh suggested that institutional players are unlikely to engage in high-risk DeFi strategies but may enter the space through stable and transparent yield-generating opportunities, such as staking.

He predicted that DeFi would move away from unsustainable high-yield incentives.

As regulatory clarity improves and infrastructure develops, fixed income could become a key element of DeFi’s next phase, providing long-term stability and reliability for both individual and institutional investors.