I kept coming back to TermMax’s 2% lending fee because the number looks much more expensive at first glance than it actually is.

The important detail is where that 2% is applied.

It is a fee on the interest layer, not 2% of the entire principal.

Take a simple example: a $10,000 loan at a 10% annual borrowing rate generates $1,000 in interest over a year. A 2% fee on that interest would be $20 — effectively 0.20% of the original principal.

And maturity changes the economics again.

A shorter-term position generates less interest, which means the absolute protocol fee becomes smaller.

This is why I think looking at the headline fee alone misses the bigger picture.

The real question for @TermMax is whether borrowers are willing to trade some flexibility for predictable financing costs.

During calm markets, floating rates may be perfectly acceptable.

But when borrowing rates suddenly move, knowing your financing cost in advance can become much more valuable.

So I’m not watching the 2% number.

I’m watching whether users actually value certainty enough to keep coming back.

A good fee model can create revenue.

Only real demand can make it compound.

#termmax @TermMax