I kept scrolling past that line until it stopped looking like plumbing.
FT is the half everyone posts about. A zero-coupon claim, bought under face, redeemed at face. A bond.
XT is what is left of the same debt unit once that claim is carved out. The interest leg. Deposit a debt token, both halves mint, and XT drains toward nothing as maturity nears.
Here is what made it click. The identity holds at every moment, not only at the end. An FT and an XT burn back into the debt token at par. No auction, no oracle. Redemption stays clean because the halves always sum to one.
So they end up in opposite hands. In the lending flow the XT leg is swapped away in the same transaction that mints it, and the lender walks off holding only FT. The leverager acquires XT, because holding the decaying half against collateral is how the loop gets built.
Someone has to own the leg that expires worthless on a known date. That is the leverager, not the lender.
Still unsure: the docs call XT the interest obligation on one page and a leverage indicator on another. I cannot tell which one traders price off.
If FT is the bond, who is really pricing XT, and against what?
#termmax @TermMax
FT is the half everyone posts about. A zero-coupon claim, bought under face, redeemed at face. A bond.
XT is what is left of the same debt unit once that claim is carved out. The interest leg. Deposit a debt token, both halves mint, and XT drains toward nothing as maturity nears.
Here is what made it click. The identity holds at every moment, not only at the end. An FT and an XT burn back into the debt token at par. No auction, no oracle. Redemption stays clean because the halves always sum to one.
So they end up in opposite hands. In the lending flow the XT leg is swapped away in the same transaction that mints it, and the lender walks off holding only FT. The leverager acquires XT, because holding the decaying half against collateral is how the loop gets built.
Someone has to own the leg that expires worthless on a known date. That is the leverager, not the lender.
Still unsure: the docs call XT the interest obligation on one page and a leverage indicator on another. I cannot tell which one traders price off.
If FT is the bond, who is really pricing XT, and against what?
#termmax @TermMax