🚀 The On-Chain NOB Spread is HERE (And What It Means for DeFi)

Hey everyone,

Just finished an intensive deep dive into something that's absolutely game-changing for DeFi traders: the convergence of TradFi and DeFi is happening right now, and the tools we need to trade like Wall Street are finally available on-chain.

💡 What's the NOB Trade?

The NOB spread (Notes Over Bonds) is a classic Wall Street trade that bets on the relationship between 10-year Treasury notes and 30-year Treasury bonds. Instead of betting on whether rates go up or down, you're betting on HOW the yield curve moves.

Here's the thesis: If you believe (like I do) that the yield curve is going to steepen—meaning long-end rates will rise faster than short-end rates—you can express that view through the NOB spread.

🔥 Why This Matters NOW

Let me break down the macro picture:

The Transfer Payment Problem

California (and many other states) are functionally insolvent. They're heavily dependent on federal transfer payments to fund basic social services. These payments cannot stop without triggering state-level collapses.

The chain reaction:

Transfer payments can't stop
Federal government must keep borrowing
Fiscal deficit cannot shrink (it's structurally impossible)
Borrowing must accelerate
Rates have to go up

This isn't speculation—it's mechanical. Unless we see a massive AI-driven economic boom, the deficit continues growing and long-end rates will move higher, faster than short-end rates.

⚙️ The On-Chain Reality

Good news: The infrastructure for on-chain NOB trades exists TODAY. You can buy and hold tokenized U.S. Treasury assets right now.

Bad news (for now): I couldn't find any money market or perp DEX where you can get SHORT Treasury tokens. Once this becomes available, we can fully execute the yield curve trade on-chain.

What's Coming: Cross-Margining

The next evolution is cross-margining—imagine depositing your BEF token (or any yield-bearing asset) directly onto a platform like HyperLiquid and using it as collateral for your TLT short. This would make these trades as capital-efficient as what you see on Wall Street.

This bridge between TradFi and DeFi is being built as we speak.

🎯 Platforms to Watch

https://app.ostium.com/

I discovered Ostium while researching this—a perp DEX with some seriously unique products:

DAX (German equities index) in euros
Dow Jones in USD
FTSE in GBP
Hang Seng in HKD
Nikkei in JPY
S&P in USD
Copper futures

These products aren't available anywhere else in DeFi. Definitely worth checking out.

📊 Quick Market Takes

Since we're talking markets, here are my current technical reads:

Bitcoin: Forming a bear flag on the weekly. Classic bearish continuation pattern suggesting another leg down. Target depends on where you measure the flagpole, but this could get interesting.

S&P 500: Sitting at technical resistance. With potential Supreme Court tariff announcements coming, a short-term sell-off wouldn't surprise me. But with Mag 7 companies still posting double-digit earnings growth, any correction is likely buyable. Markets don't crash when the biggest components are still crushing earnings.

NASDAQ: Near all-time highs with some support forming. Could see a double top formation before the next move higher.

Gold: Would not be surprised to see a correction here, but structurally I'm bullish. Targeting $5,000 before year-end. The commodity action is another reason to be structurally bullish on rates.

Silver: Double top formation after breaking above $50 and hitting ~$54. Now we've got resistance at the double top and support way down at the breakout level. Seeing bearish divergence on RSI (price up, momentum stalling). If we get a correction, I'd watch RSI around 40 on the daily as a potential entry signal.

🔮 What's Next

Tomorrow I'm diving into Steven TCG's research on yields on gold, silver, and levered stables. Going to audit all the protocols he mentioned and share my findings.

The question isn't IF these powerful new tools will be used at scale. The question is: Who's going to be the first to cross that bridge?

Stay sharp out there. The convergence is happening whether TradFi realizes it or not.

Discussion questions: