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Treehouse x FalconX launches TESR FRA, can ETH staking finally lock in interest rates? 🔔 Introduction: TESR FRA is a type of forward contract that can hedge or bet on future ETH staking rates. Fixed income is the largest market in TradFi, and now @TreehouseFi has teamed up with FalconX to bring this tool on-chain. This means you can turn future staking yields into fixed deposits, allowing institutions to enter the market with more confidence. 1️⃣ What if you could lock in future ETH staking yields? When people usually talk about ETH staking, they think it's a stable way to earn returns. But if you really calculate it, you'll find it's not stable at all; sometimes it's 5%, sometimes it's 3%, and when there are more validators, it drops immediately, while during busy network times, it can spike. Retail investors might think they can earn something just by holding, but for institutions, cash flow needs to be planned, and finances need to be arranged; living off floating rates can be quite uncomfortable. 2️⃣ TradFi tools are now on-chain: This time, @TreehouseFi has joined forces with @FalconXGlobal to bring traditional financial tools, specifically forward rate agreements (FRA), onto the blockchain. More specifically, they have launched the Ethereum staking rate forward contract TESR FRA: 🔸 You can lock in a future staking rate (for example, currently at 3.2%). 🔸 No matter whether market rates rise or fall in the future, you can still receive the agreed fixed rate. In simple terms, it's about "receiving fixed / paying floating" or "receiving floating / paying fixed" strategies, using it to hedge against volatility, or simply betting on the future direction of rates. At a more advanced level, you can string multiple FRAs together to simulate interest rate swaps (IRS), extending the duration. 3️⃣ Why is this important? Because the fixed income market is the largest asset class in TradFi. Bonds and interest rate derivatives support a market worth trillions of dollars. DeFi has previously been limited to spot, leverage, and futures products, with a genuine "interest rate market" being almost non-existent. The launch of TESR FRA is the first time this piece of the puzzle has been filled in. 4️⃣ Institutions are already getting involved: Another important point is that several funds have already started using it (August, Edge Capital, RockawayX, etc.). With FalconX leading the way, which is already the largest digital asset prime broker globally, their scale and reputation are significant. Their involvement at least indicates that institutions are genuinely willing to participate. 5️⃣ A shift in narrative: DeFi is often criticized for being a Ponzi scheme, but with the emergence of TESR FRA, the narrative has changed; this is a real risk management tool, something familiar to TradFi. Locking in yields, hedging risks, and interest rate swaps are all fundamental building blocks of the financial market. DeFi yields are starting to move towards the direction of a "hedgeable, plannable" fixed income market. It's important to note that in TradFi, fixed income is the largest market. 🎯 In conclusion: TESR FRA provides ETH staking with a genuine tool for hedging and planning interest rates. The move by Treehouse and FalconX is not just about bringing a product on-chain; it introduces TradFi strategies, which may attract more institutional funds to truly enter the on-chain fixed income space. If the on-chain fixed income market can really grow, then $TREE is likely a noteworthy entry point.

There are indeed people bringing traditional finance concepts into Web3. TreeHouse @TreehouseFi, in collaboration with FalconX @FalconXGlobal, "the world's largest integrated brokerage for digital assets," has just launched the first Ethereum staking rate forward contract, the "TESR FRA." This is the first time in DeFi history that a forward rate agreement (FRA) / interest rate swap (IRS) has been introduced. ❓ What is this complicated Ethereum staking rate forward contract "TESR FRA"? ❓ Aren't there enough things to play with in decentralized finance (DeFi)? Why introduce something like this? With these two questions in mind, as a former worker in traditional finance, let me give you an example to explain. First, let's look at the FRA (Forward Rate Agreement). In traditional finance, an FRA is a financial derivative contract that allows both parties to agree on interest settlement for a nominal principal at a fixed rate over a specific future period. Essentially, it is a tool for hedging or speculating on future interest rate fluctuations, rather than direct borrowing or depositing. Now, applying this to Ethereum staking, let's pretend we really want to stake ETH. For example: Suppose you have 100 ETH and plan to stake it in a lending protocol in six months. The page states an annualized interest rate of 5%, but it varies daily—maybe 3% today, 8% tomorrow, 1% the day after, but ultimately it will give you around 5%. If you're not satisfied, you say, "No, I want an annualized 5%. I don't care how much you give me daily; I just want 5%. If it's more, that's yours; if it's less, you have to make up the difference for me." This way, you reach a forward rate agreement with them, based on the principal of 100 ETH, having paid or received the agreed interest rate. Fast forward six months, if the interest rate has risen to 6%, you will need to compensate the protocol for the 1% interest rate difference; if it has dropped to 4%, the protocol will need to compensate you for the 1% interest rate difference. So, do you still need to deposit those 100 ETH into the protocol? What for? The interest has already been settled. At this point, you, being clever, have realized that this is no longer about depositing money; you don't even need to pretend you have 100 ETH to engage in interest rate discussions. Compared to traditional ETH staking, the Ethereum staking rate forward contract "TESR FRA" has several significant advantages: 🔸 Flexibility: Anyone can participate in the TESR FRA market (speculators, hedgers, institutions, etc.) without needing to actually hold or stake ETH, lowering the participation threshold. 🔸 Risk Management: Institutions or individuals can use the FRA to manage interest rate risk, betting on the direction of interest rates (going long or short on forward rates), without having to actually go through the staking process (which requires locking assets, running nodes, etc., and is relatively complex). 🔸 Market Efficiency: With FalconX's institutional-grade liquidity, the TESR FRA provides an efficient trading and settlement mechanism, focusing on the financialization of interest rates. This collaboration between Treehouse and FalconX brings the FRA— a core tool of the traditional fixed income market— into Web3. If you believe this is the future, $TREE is your way to join.