I spent some time tracing the FT and XT mechanics again, and I realized I was initially thinking about them like ordinary debt tokens. That made the whole structure seem more complicated than it probably is.
What caught my attention is how separating principal and yield allows the fixed-rate position to become tradable. A borrower and lender don’t necessarily need to stay directly connected until maturity because the FT can move through the market while still representing the future redemption claim.
I also had to rethink XT. At first, I wondered why it should disappear economically at maturity if it is part of the debt-token relationship. My current understanding is that XT represents the complementary value before maturity, while FT ultimately retains the claim to the debt token. But I’m still trying to understand all the edge cases around that transition.
The range-order design raised another question for me. Why would a borrower accept progressively lower rates as more liquidity gets matched? Maybe the borrower values initial liquidity differently from additional liquidity, especially when capital needs change with market conditions.
That makes me wonder whether these curves are really just pricing tools, or a way of expressing changing preferences for liquidity.
I’m curious how these mechanisms behave during stressed markets, especially when FT and XT liquidity becomes thin. Is that where the real risks become visible?
#termmax @TermMax
What caught my attention is how separating principal and yield allows the fixed-rate position to become tradable. A borrower and lender don’t necessarily need to stay directly connected until maturity because the FT can move through the market while still representing the future redemption claim.
I also had to rethink XT. At first, I wondered why it should disappear economically at maturity if it is part of the debt-token relationship. My current understanding is that XT represents the complementary value before maturity, while FT ultimately retains the claim to the debt token. But I’m still trying to understand all the edge cases around that transition.
The range-order design raised another question for me. Why would a borrower accept progressively lower rates as more liquidity gets matched? Maybe the borrower values initial liquidity differently from additional liquidity, especially when capital needs change with market conditions.
That makes me wonder whether these curves are really just pricing tools, or a way of expressing changing preferences for liquidity.
I’m curious how these mechanisms behave during stressed markets, especially when FT and XT liquidity becomes thin. Is that where the real risks become visible?
#termmax @TermMax