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.