When talking about the 'risk-free rate' in the crypto world, many people first think of Bitcoin, but @Treehouse Official disagrees.
Bitcoin's PoW mechanism seems reliable, mining has fixed rewards, and it is still the core of the network, but the problem lies in its heavy reliance on external aid. Mining revenue depends on mining machine computing power and electricity costs, and these external factors prevent it from becoming a unified and stable benchmark.
Ethereum, on the other hand, is different. In the eyes of Treehouse, it resembles a decentralized small country: it has its own currency system, governance rules, and a well-developed financial infrastructure. The key factor is its PoS mechanism, where users stake ETH to maintain network security, receiving stable returns that do not rely on external costs. Moreover, staking is the 'foundation for survival' for Ethereum; without staking, the network cannot function.
@Treehouse Official has been promoting a DeFi fixed income ecosystem, and the risk-free rate is the guiding star of this ecosystem. With the staking yield of Ethereum as this benchmark, whether designing arbitrage strategies for tETH or using DOR (decentralized interest rate) to create interest rate swap products, there is a reliable yield baseline.
For example, if users know that the annualized staking yield of Ethereum is approximately 3.5%, then the arbitrage yield using tETH must be higher than this to be worthwhile, and the interest rates set by DOR must also revolve around this benchmark. In this way, the entire ecosystem's yields become clear and controllable.
