Tokenizing government bonds and building a liquidity pool on Uniswap will be a good business

Written by: Huang Shiliang

In the next five years, it is expected that a large number of traditional financial assets will be gradually put on the chain. This is what the industry often talks about RWA (real world assets), and the most important one of them is government bonds.

Currently, U.S. Treasury bonds are already on the chain, but the existing model is not "orthodox" enough.

标准的代币，例如我们熟悉的各种 ERC20 代币，具有无须许可的特性，任意walletCan be freely transferred and canexchangeand DeFi. However, the current "U.S. Treasury bond token" is not a true ERC20 token, but more like a "reverse ETF". For example, MakerDao's Treasury bond model is to purchase Treasury bonds through financing, and then have the bank hold it, and distribute the proceeds directly to the investors. It lacks a real "Treasury bond coin" that can circulate freely on the chain.

Although there are some treasury-related tokens, such as STBT[1], which represents the rights and interests of U.S. Treasury bonds, it is not ERC20 standard and has not yet been widely used in mainstream DeFi scenarios.

The next step for Treasury tokens: Standardized ERC20 tokens

The next step for the Treasury bond token is to develop into a standardized ERC20 token so that it can be formally integrated into the cryptocurrency ecosystem. As an ERC20 token, it can enter the DeXiaobai NavigationFi mining project, orexchangeCirculation.

Treasury bond tokens are particularly suitable for the DeFi ecosystem because they naturally possess the characteristics of a "golden shovel for mining."

Compared with stablecoins such as USDT, treasury bonds have stable returns and less price volatility, making them a strong competitor to stablecoins. For example, when exiting from cryptocurrency trading, you can hold treasury bond tokens instead of USDT, which is undoubtedly a better choice in terms of yield.

Application scenarios in DeFi: as collateral and liquidity pool

The price of treasury bond tokens is relatively stable, making them suitable as collateral for lending platforms such as Aave, thereby achieving leverage operations. This is the favorite of gamblers in the cryptocurrency circle.

Since the treasury bond has stable returns, it can further activate various staking methods in the currency circle. Rebalancing technology similar to stETH and wstETH can be applied to treasury bond tokens. Looking at the activity of stETH and wstETH in DeFi, you can see the potential of treasury bond tokens.

Although the price of treasury bonds fluctuates less, they are not stable currencies. According to historical data, the long-term fluctuation of treasury bond prices is about 10%, and the daily fluctuation range is about 1%.

This moderate volatility and price stability make treasury tokens particularly suitable for building liquidity pools in AMM protocols such as Uniswap to earn transaction fees. In platforms such as Uniswap, the TVL (total locked volume) of stablecoin trading pairs ranks among the top because of the small impermanent loss.

As an asset that tends to be close to the face value in the long term, if the Treasury bond token forms a fund pool with stablecoins, its impermanent loss is also small and relatively easy to calculate. Therefore, it is very suitable for fund pool mining, similar to the stablecoin trading pair of USDT-USDC.

If treasury bond tokens are widely circulated in DeFi, the treasury bond token trading pair on Uniswap is very likely to become one of the trading pairs with the largest TVL.

Global Perspective: The Potential of Tokenization of National Debts

If the U.S. Treasury bonds are successfully circulated on the chain, other countries may gradually issue Treasury bond tokens on the chain. At that time, the Treasury bond tokens of different countries can be combined into a capital pool to serve as the counterparty of foreign exchange traders, which will bring extremely large trading volume.

Summarize

The tokenization of national debt and its becoming an orthodox ERC20 token has a bright future. It is expected to become the largest on-chain real asset after the US dollar stablecoin and further promote the development of DeFi.

The article comes from the Internet:Tokenizing government bonds and building a liquidity pool on Uniswap will be a good business

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