This is my non-professional understanding of what author is thinking about the relationship between bitcoin and treasury yield curves. Someone should correct me if I'm making bad assumptions. I am not a teacher like Nik Bhatia and do not have certifications like a CFA. It's mostly a summary so I can externalize my understanding of this topic.

US Treasuries are considered risk free securities -- the US government will do whatever it can do to pay them out. It is priced on a yield curve -- borrowing money for 10 years (US10Y) will typically give a greater return than borrowing for 5 years (US5Y) because as you move into the future there is a greater chance of things going wrong since there is more time that passes (that's my understanding of it...) and you are taking on more and more risk. This is the time value = Money now is worth more than money later.

This US treasury yield curve is watched carefully by people that think about finance/money and is one of the most important macroeconomic indicators for capital markets, where treasuries are the primary risk-free asset. The return on this risk-free asset is known as the risk-free rate, which is the greatest return you can make at "zero risk" (the risk being the government collapses and cannot repay its obligations which is very rare and would mean a collapse of the global financial system). If you invest in equities or crypto, these will have a higher risk but likely a higher return compared to treasuries.

Since a treasury is considered risk-free, you can borrow against it very easily. In the case of this article's hypothetical situation where a university has a $500M portfolio (this portfolio contains assets that are NOT liquid cash!) and needs $100M tomorrow, the university can raise this money by selling $100M of 5-year treasuries to Citibank's Treasury Desk. Citibank can give the university $99.95M in cash in exchange for the $100M US5Y. The Citibank Treasury desk may not be able to meet the cash obligations for the $100M US5Y, but treasuries are very very very safe so it's very close to cash even though it isn't. There is only a tiny chance that the cash lent to the school will suddenly be worth more than the treasury. When the university can get the cash they can buy back their $100M US5Y, plus a fee for their services and taking on that risk.

Remember that US Treasuries are always giving a little interest (coupon). Citibank in this example is getting interest the entire time they are holding the $100M US5Y. The cash used for the university construction is not making interest, but the US treasury is actively providing value to Citibank.

So for bitcoin. The author argues that since US Treasuries are important to capital markets, their yield curves and interest rates are important indicators and are used widely for lending and understanding the current risk-free rate. The author is saying that the 8-hour perp contract is similar. There is no singular "yield curve" as there is in treasuries since the market is very disjointed. There is no one central issuer such as the US government. But the author argues that since there is similar activity in bitcoin futures funding, exchange lending, LN routing, etc that have their own interest rates, some of these may be similar to the grand US Treasury Yield Curve in regards to bitcoin financial activity.

So you could for example have spent 3BTC on an instrument that gives you a cumulative 3.5BTC in 1 year (let's call it the BTC1Y, issued by BitMEX). So you can't just use that BTC -- it's locked up in an asset until its maturity, and the reason you have it is so you can make some interest instead of sitting on cash that will devalue over time. According to the author this instrument could have a standardized, global yield curve. If you wanted to raise immediate cash to make an offer on a house in Milwaukee, you could hypothetically find someone that would take the BTC1Y on as collateral and give you cash. The lender would consider this yield curve when making assessments on how much risk to take on.

The author's thesis is "I believe the vibrant perp funding market is evidence that bitcoin is serving a monetary function on par with two of the world’s most important asset classes: US Treasuries and real estate." If we use the term "on par" to mean that the decentralized markets may converge on a similar yield rate on certain contracts, I agree. I would love to see how smart contracts would cause the emergence of certain indicators for certain activities, or what could emerge from a growing lightning network with the LNRR.

But while there could be interest rates and emergent yield curves associated with bitcoin activities such as exchange lending or perp swaps or mixing, I do not think that bitcoin will be nearly as important to capital markets as the other two assets classes: Treasuries are valuable because of their risk-free rate (backed by the USA and all its guns) and mortgages are around an insured valuable-to-humans physical asset that can be repossessed or rented out to other humans. Both these can consider rates going out to 10-30 years. It's about trust, utility, and most importantly mitigating risk. BitMEX only offers 8 hour contracts, and bitcoin has fluctuated in value over just 6 months (33k in july 2021 and 63k this year!!). So while there is the inevitable emergence of certain interest rates and yields within the bitcoin ecosystem, their emergence does not imply bitcoin fitting into the larger financial markets and have utility within capital markets until the value stabilizes. But the derivatives and contracts based on bitcoin may help it achieve this stabilization and reduce risk.