In the development of DeFi fixed income track, the “weak correlation with the entity economy” has always been the core bottleneck restricting its long-term stability—traditional DeFi fixed income, even when accessing RWA (real-world assets), often remains at a “superficial linkage”: users only know that the assets “correspond to a certain type of entity project” (such as infrastructure, consumer installments), but cannot penetrate to view the operational data of the underlying entity assets (such as project revenue, cash flow); after the entity project's revenue is received, it must go through multiple manual transfers to be distributed to users, resulting in both delayed losses and lack of transparency; more critically, the rights of entity assets cannot circulate flexibly within the DeFi ecosystem, leading to “DeFi assets being disconnected from entity value,” where user profits still depend on market speculation rather than being supported by entity cash flow. This “virtual-real split” model makes it difficult for DeFi fixed income to obtain an “entity value anchor,” and also exposes users to potential risks of “profits lacking entity support.”
TreehouseFi's innovation is not merely to “increase RWA targets,” but to construct a penetrating closed loop of “physical assets - digital certificates - user profits” through the entity economy anchoring protocol (REAP): achieving operational transparency with “entity data on chain,” ensuring direct profit delivery to users with “cash flow smart distribution,” and realizing flexible circulation of assets with “digital rights confirmation”— allowing users to hold DeFi fixed-income assets that are directly anchored to the specific rights and cash flows of entity economic projects, truly achieving “assets backed by entities, profits supported by cash flows.” All mechanisms are based on IoT data collection, third-party audit evidence, and automated execution of smart contracts, with no centralized intervention, and all entity data, cash flow records, and rights confirmations are fully traceable or compliant on-chain.
I. The “virtual-real split” dilemma of traditional DeFi and entity economy binding: three core pain points
To understand the value of TreehouseFi's penetrating binding, one must first dissect the inherent defects of traditional DeFi fixed income when connecting with the entity economy—these pain points are not theoretical assumptions, but real problems exposed by the industry in RWA practice, directly leading to “entity endorsements being merely formal, and user trust being hard to establish”:
1. The “black box” of underlying entity data: Users cannot see “what the assets correspond to”
RWA projects accessed by traditional DeFi have always been a “black box” for users: users can only see surface information such as “a certain infrastructure project RWA annualized at 5.5%,” but cannot penetrate to obtain the core operational data of the project—such as the current progress of the project (whether it is proceeding as planned), revenue situation (whether it meets expected cash flow), risk status (whether there are overdue risks). Even if the platform discloses information, it is often “quarterly/annual static reports,” and users need to manually check on third-party websites, lacking timeliness and verifiability. For example, in the “consumer installment RWA product” of a traditional DeFi platform, users cannot know which batch of consumer installment users their assets correspond to, nor can they view the repayment rates and overdue rates of these users; they can only passively accept the “annualized returns” provided by the platform. If the underlying installment users default on a large scale, the users' profits will be directly affected with no warning.
2. The “multi-step losses” of entity cash flow distribution: Users cannot wait to know “where the profits come from”
In traditional DeFi, the distribution of cash flow from entity projects to user profits experiences “long chains and high losses”: The profits of entity projects (such as infrastructure projects receiving engineering payments, or consumer installment repayments) must go through 4-5 steps such as “project party collection → third-party escrow account → platform manual verification → smart contract distribution,” taking 3-7 days, and each step may incur fees (such as escrow fees and transfer fees), resulting in a 1%-3% reduction in the profits that finally reach user accounts. More critically, the distribution process lacks transparency— users cannot know “how much profit the entity project received this month” or “why their profits are less than last month,” and can only passively accept the platform's “profit notification.” If there is any misappropriation or delay in the process, user rights are hard to protect. For example, in an agricultural supply chain RWA project, if the actual revenue from agricultural product sales is $1 million this month, but the user only receives $850,000 in corresponding profits, the platform does not disclose the whereabouts of the $150,000 difference, causing a trust crisis among users.
3. The “non-transferability” of entity asset rights: Users cannot know “what rights correspond to”
In traditional DeFi, users holding “entity-linked assets” can only enjoy profit distribution and cannot flexibly operate the rights of the underlying entity assets: If a user holds RWA assets from a certain infrastructure project and wants to pledge them to another platform for short-term liquidity, or transfer them to other users for cashing out, it cannot be achieved—because the rights of the entity assets have not achieved “digital confirmation” and cannot circulate within the DeFi ecosystem. If users want to cash out, they can only redeem the assets (possibly incurring fees) and then transfer the funds to another ecosystem, leading to “the liquidity of entity asset rights being locked,” which not only lowers the asset's usage value but also restricts the collaborative efficiency between the DeFi ecosystem and the entity economy. For example, if a user holds $100,000 in “supermarket consumer installment RWA assets” and urgently needs funds to transfer $50,000 in corresponding rights, under the traditional model, there is no circulation channel available, and they can only choose to redeem early (deducting 5% fees, losing $5,000).
II. TreehouseFi's “Entity Economy Penetrating Binding” scheme: The three core mechanisms of the entity economy anchoring protocol (REAP)
The REAP protocol of TreehouseFi is not simply an “expansion of RWA targets,” but through the three-layer design of “data penetration, cash flow penetration, and rights penetration,” it enables DeFi fixed-income assets to form a “strong coupling” with entity economic projects, ensuring that all mechanisms are based on the technological closed loop of “entity data on-chain - smart contract execution - on-chain rights confirmation,” ensuring “virtual-real correspondence and transparent efficiency.”
1. Penetrating on-chain of entity data: Allowing users to “see the underlying assets clearly”
To address the pain point of traditional “entity data black box,” the REAP protocol presents the operational data of underlying entity projects to users in real-time and transparently through “multi-source data collection + on-chain evidence,” allowing users to directly view the specific rights and operational status of the entity projects corresponding to their assets through the “asset penetration dashboard”:
• Multi-source data collection and on-chain: The REAP protocol connects three core data sources to ensure data authenticity and verifiability:
◦ IoT data for physical projects: For projects with physical assets such as infrastructure and agriculture, IoT devices (such as progress sensors for infrastructure projects and yield monitoring devices for agricultural greenhouses) are deployed to collect data on “project progress, yield, energy consumption,” etc., in real-time. The data is encrypted and directly put on the chain, making it tamper-proof;
◦ Third-party auditing and payment data: Inviting third-party institutions such as PwC and EY to conduct regular audits of the financial data of entity projects (such as revenue, costs, cash flow), with audit reports stored on-chain in hash form; simultaneously connecting to the payment channels of entity projects (such as bank flows, third-party payment bills), with funds receipt records synchronized to the chain in real-time;
◦ Industry regulatory data: For highly regulated areas (such as consumer finance, supply chain finance), the record data from local financial regulatory platforms is connected to ensure the compliance of entity projects, and the regulatory record information can be checked on-chain.
• Penetrating asset dashboard: Users in their TreehouseFi accounts can view through the “asset penetration dashboard”:
◦ Corresponding rights: Every asset held by the user (e.g., $10,000 infrastructure RWA) corresponds to specific rights such as “the maintenance revenue rights of section 3 of a certain provincial highway” or “the rights to 100 quality installment repayments from a certain consumer installment platform in Q2 2024”;
◦ Operational data: Corresponding to the real-time operational status of entity projects (such as daily average traffic on highways, current repayment rates of consumer installments), historical cash flow records (such as project revenue received in the last three months);
◦ Risk warning: If an entity project encounters abnormalities (such as a repayment rate lower than expected or project delays), the dashboard pushes real-time warnings and explains the “impact on user returns (e.g., this month's returns may decrease by 5%)”, keeping users informed in advance.
For example, a user holding TreehouseFi's “agricultural supply chain RWA assets” can see in the penetration dashboard: the asset corresponds to “the sales revenue rights of 500 acres of corn from a certain province's corn planting base for the 2024 production season,” the current corn growth status (leaf humidity and light data collected by IoT devices), the amount of signed purchase orders (confirmed by third-party audit), and the record of sales revenue received last month (bank flow on-chain), thoroughly resolving the issue of “ambiguous asset correspondence.”
2. Intelligent distribution of entity cash flow: Allowing users to “reach the source of profits directly”
To address the pain point of traditional “cash flow distribution losses,” the REAP protocol achieves “zero delay, zero loss, full transparency” in distributing cash flow from entity projects to user profits through “automated smart contracts,” without any manual intervention in between:
• Cash flow collection and confirmation: After the revenue of the entity project (such as tolls for infrastructure projects, repayments for consumer installments) is received, it first enters the “cash flow collection account” managed by the smart contract, which is publicly available for checking; the smart contract automatically confirms which users should receive each cash flow based on the “correspondence between user assets and entity rights” (for example, a $100,000 infrastructure toll corresponds to 500 users holding rights for that section of road);
• Real-time automatic distribution: After the rights confirmation is completed, the smart contract automatically distributes cash flow to user accounts based on “user holding proportion” within 1 hour. The distribution logic is open-source and verifiable— for example, if a certain entity project receives $1 million cash flow this month, and user A holds 1% equity in that project ($100,000 asset), they will automatically receive $10,000 profit (with no fees); after the profit arrives, a real-time “profit source notification” is pushed (e.g., “Your $10,000 profit comes from the toll revenue of a certain highway section in October 2024”);
• Full traceability of distribution records: The “source (entity project name, receipt time, amount), distribution objects (user address, holding proportion), distribution results (received amount, time)” of each cash flow are publicly disclosed on-chain, allowing users to query the “entity cash flow traceability” of each profit through the blockchain explorer, ensuring that “profits have a traceable source.”
Data shows that through the intelligent distribution of the REAP protocol, the average time for cash flow from entity to user profit has been reduced from the traditional 3-7 days to within 1 hour, with no fee losses in the distribution process (the platform subsidizes the smart contract Gas fees), and the user profit arrival rate reaches 100%; for a certain infrastructure RWA project, $5 million cash flow was received within the month, and the profits of 5,000 users were all received within 45 minutes, with distribution records verifiable on-chain, without any disputes.
3. Digital confirmation and circulation of entity rights: Allowing users to “actively utilize asset rights”
To address the traditional pain point of “non-transferability of entity rights,” the REAP protocol transforms the rights of underlying entity assets into “on-chain digital certificates (REAP-V),” where the certificates are 1:1 anchored to user assets and can achieve “pledging, transferring, and splitting” within the TreehouseFi ecosystem, allowing entity rights to possess flexible liquidity within the DeFi ecosystem:
• Digital confirmation of rights: The REAP protocol generates a unique “digital certificate (REAP-V)” for each entity asset right, which includes core information such as “entity project number, rights type (revenue rights/dividend rights), corresponding asset amount, validity period,” etc., using NFT or ERC-1155 standards for on-chain confirmation. Users holding assets automatically receive the corresponding REAP-V, with certificates that are tamper-proof and cannot be forged;
• Flexible circulation within the ecosystem: REAP-V supports three core circulation scenarios without leaving the DeFi ecosystem:
◦ Pledge financing: Users can pledge REAP-V to TreehouseFi's lending module to obtain stablecoin loans with a maximum pledge rate of 80% (e.g., holding $100,000 of infrastructure REAP-V can pledge to borrow $80,000 USDC), and the entity profits corresponding to REAP-V still belong to the user during the pledge period;
◦ Rights transfer: Users can list REAP-V for transfer in TreehouseFi's trading module, with the transfer price set by the user (must not be lower than the principal of the corresponding asset). After the transfer is completed, the entity rights and subsequent profits automatically transfer to the transferee, and the smart contract automatically completes the change of rights confirmation, all without the need for third-party intermediaries;
◦ Rights splitting: For high-value entity assets (such as $1 million infrastructure project rights), REAP-V supports splitting into smaller certificates (e.g., 100 certificates of $10,000 each), allowing users to purchase or transfer part of the rights based on their funding needs, thus lowering the participation threshold for entity assets.
For example, a user holding $100,000 in “consumer installment REAP-V,” due to an urgent need for funds, can choose: 1. Pledge REAP-V to borrow $80,000 USDC (annualized at 3.5%), during which the repayment profits of the consumer installment still belong to them; 2. List for transfer $50,000 corresponding REAP-V, and the transferee, after paying $50,000, can obtain subsequent profits from this portion of rights. This flow model allows entity rights to no longer be “fixed,” significantly enhancing the usage value of DeFi assets.
III. Industry value: The transformation of DeFi fixed income from “speculative virtuality” to “real value”
TreehouseFi's innovation of “entity economy penetrating binding” essentially shifts DeFi fixed income from “relying on the speculative virtual value of the market” to “relying on the real cash flow of the entity,” bringing three core values to the industry and achieving a win-win situation of “DeFi serving entities, entities empowering DeFi”:
For users, this model allows DeFi fixed income to gain an “entity value anchor”—user profits no longer rely on the capital gaming within the DeFi ecosystem, but come from the real cash flow of entity economic projects, significantly enhancing the stability and predictability of profits. At the same time, penetrating data and transparent distribution solve the problem of “information asymmetry,” allowing users to clearly know what entity their assets correspond to and where the profits come from, significantly enhancing trust. Data shows that users connected to entity-bound assets in TreehouseFi have a 30-day retention rate of 89%, far higher than the 55% of traditional RWA products, with the core being the sense of safety provided by “profits supported by entities.”
For the entity economy, this model provides “efficient and low-cost financing channels” for entity projects—traditional entity projects (such as small and medium infrastructure and agricultural supply chains) require multiple steps such as bank credit approval and collateral assessment, taking months and incurring high costs. However, through the REAP protocol, entity projects can transform future cash flows into DeFi digital certificates, quickly reaching global DeFi users, reducing the financing cycle to 1-2 weeks and lowering financing costs by 20%-30% (without paying high intermediary fees). For example, a county agricultural supply chain project issued $5 million RWA certificates through the REAP protocol, completing subscriptions within 3 days, with financing costs of only 4.5%, far lower than the local bank's 6.8% loan interest rate.
For the industry, this model provides a “long-term stable development direction” for DeFi fixed income—traditional DeFi is easily influenced by market cycles and fluctuates sharply due to the “virtual-real split.” However, TreehouseFi's penetrating binding allows DeFi to form a “value symbiosis” with the entity economy: the entity economy provides stable cash flow and value anchors for DeFi, while DeFi provides efficient financing and liquidity support for the entity economy, ultimately enabling DeFi to break free from the skepticism of being an “air castle” and become a “digital financial tool” that serves the entity economy. This model also provides a replicable technical paradigm for subsequent DeFi access to more entity scenarios (such as new energy projects, medical supply chains).
Of course, the penetrating binding of the entity economy also faces challenges—such as the compliance review of entity projects (which must meet the regulatory requirements of different countries for RWA), verification of the authenticity of IoT data (to prevent data forgery), and legal confirmation of rights for cross-regional entity projects (which must interface with different regional property registration systems). However, the practice of TreehouseFi has proven: when DeFi fixed income truly penetrates and anchors the cash flow of the entity economy, it can simultaneously obtain the “stability of entities” and the “efficiency of DeFi.” This may be the greatest insight TreehouseFi brings to the industry: the long-term value of DeFi lies not in creating “financial games” divorced from entities, but in using technology to break down the barriers between “virtual” and “real,” allowing digital assets to genuinely serve the value creation of the entity economy, and letting user profits truly take root in the soil of real cash flows.
