Luganodes X Treehouse: Powering Decentralized Fixed Income

Introduction

We are excited to announce our partnership with Treehouse, an innovative decentralized protocol redefining fixed income in the blockchain space. Treehouse introduces innovative primitives—Treehouse Assets (tAssets) and Decentralized Offered Rates (DOR)—that bridge the gap between traditional finance and decentralized finance (DeFi), enabling the creation of fixed income products for digital assets.

Luganodes, as a panelist on the Treehouse network, is proud to support its mission by delivering robust infrastructure that enhances scalability, reliability, and security. Together, we aim to unlock new financial possibilities for institutions and retail investors in the decentralized economy.

The Challenge of Fixed Income in Blockchain

Fixed income products, the backbone of traditional finance, are noticeably underrepresented in the cryptocurrency space. With traditional markets valued at over $600 trillion, crypto fixed income barely scratches the surface, hovering in the low double-digit billion range. This stark difference highlights the nascent stage of fixed income in crypto.

Unlike traditional finance, where central banks and established benchmarks guide the market, crypto lacks a unified benchmark rate. This absence creates challenges in developing standardized and scalable fixed income products. Furthermore, liquidity and trading volume in crypto remain limited, often fragmented across bilateral agreements with minimal institutional involvement.

Despite these hurdles, crypto fixed income is rapidly evolving, introducing innovations like decentralized credit processes and peer-to-peer lending. While small in scale, these advancements point to a future where fixed income could play a more significant role in the digital asset ecosystem.

What is Treehouse?

Treehouse is a decentralized protocol designed to unify fragmented on-chain interest rate markets and foster the growth of fixed income products. By leveraging tAssets like tETH, Treehouse facilitates real yields that exceed standard staking rewards through interest rate arbitrage. This additional yield, known as Market Efficiency Yield (MEY) is a unique value proposition that reflects the protocol's ability to optimize returns while enhancing market efficiency.

Treehouse also introduces Decentralized Offered Rates (DOR), a consensus mechanism that provides accurate interest rate benchmarks critical for DeFi applications. This mechanism incentivizes participants to contribute and verify rate data, ensuring the integrity and reliability of the protocol.

Core Innovations of Treehouse

Treehouse's architecture is built on two transformative innovations:

tETH: The First Treehouse Asset

tETH represents a breakthrough in consolidating Ethereum’s fragmented interest rate markets, offering real yields that surpass Ethereum’s native Proof-of-Stake (PoS) rewards. Utilizing a leverage staking strategy, tETH not only enhances cryptoeconomic security but also democratizes access to fixed income arbitrage opportunities previously reserved for institutional investors. By holding tETH, users shape on-chain markets, aligning them closer to Ethereum’s "risk-free" rate while retaining the ability to participate in DeFi activities.

In addition to delivering enhanced staking rewards, tETH is pivotal to the Decentralized Offered Rates (DOR) system. Holders contribute directly to the security of DOR by supporting its operations and acting as key participants in its ecosystem. Treehouse mitigates potential risks such as depegging and interest rate volatility through advanced risk management mechanisms, ensuring both safety and optimized returns for users.

Decentralized Offered Rates (DOR): A Transparent Benchmark for DeFi

Decentralized Offered Rates (DOR) are the backbone of the Treehouse ecosystem, designed to establish reliable, objective reference rates for the DeFi industry. Derived through a deterministic consensus mechanism, DOR incentivizes a market of stakeholders to provide accurate, verifiable interest rate data and forecasts. This objectivity shields DOR from manipulation, offering an innovative alternative to traditional benchmark rates like LIBOR or SOFR, which have faced issues with subjectivity and centralization.

By combining tETH with DOR, Treehouse not only solves the challenges of fragmented on-chain interest rates but also introduces a robust infrastructure for fixed income innovation in digital assets.

Luganodes X Treehouse

We are thrilled to announce that Luganodes has joined Treehouse Protocol as a panelist for the Decentralized Offered Rates (DOR) mechanism. With our extensive expertise in institutional-grade staking and infrastructure, Luganodes is uniquely positioned to enhance the accuracy and reliability of the Ethereum Staking Rate (ESR) Curve.

As a world-class, non-custodial blockchain infrastructure provider, we are a natural fit for the DOR panel. Leveraging tools like the Luganodes Terminal, we deliver precise calculations of Ethereum staking rates, directly contributing to the robustness of Treehouse’s benchmark rate-setting mechanism.

Conclusion

Treehouse and its innovations mark the beginning of a new era for fixed income in crypto. With tAssets and DOR, the protocol enables the creation of advanced financial products. Treehouse represents the next logical step in institutional blockchain adoption, bridging the gap between traditional and decentralized finance. With Luganodes’ support and institutional experience, Treehouse is set to redefine fixed income for the digital economy, creating a secure and accessible financial future for all.

If you are interested in learning more about Treehouse, visit their website, follow them on X (Twitter), or join their Discord community.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.