#termmax @TermMax
I was looking at TermMaxs token design again, and the part that actually clicked for me wasnt the Fixed-Rate Token. It was the relationship between the FT and the XT, because together they basically split a loan into principal and yield.
Heres the simple version. TermMax says 1 FT + 1 XT = 1 debt token. The FT represents the right to receive the debt token at maturity, while the XT is the complementary piece that carries the yield component.
So imagine 1 USDC debt. You can think of it as being separated into two claims, one that matures into the principal and another that represents the yield.
That sounds unnecessarily complicated until you look at what it lets the protocol do.
The borrower can create FTs against collateral, sell the interest component for liquidity, and lock in the borrowing economics at the start. The lender gets exposure to the fixed return through the corresponding token structure.
Its basically the same financial idea as separating the principal of a bond from its interest cashflows, except the pieces are tokens that can move around on-chain.
And thats the part I find interesting. TermMax isnt just putting a fixed rate on top of a normal DeFi loan. Its actually turning the different economic claims inside the loan into tradeable objects.
The question I keep coming back to is whether splitting one debt obligation into separate tokens creates genuinely better markets, or just more complexity that users eventually have to understand. @TermMax
$BTW $ACE $EDEN
#TermMax
I was looking at TermMaxs token design again, and the part that actually clicked for me wasnt the Fixed-Rate Token. It was the relationship between the FT and the XT, because together they basically split a loan into principal and yield.
Heres the simple version. TermMax says 1 FT + 1 XT = 1 debt token. The FT represents the right to receive the debt token at maturity, while the XT is the complementary piece that carries the yield component.
So imagine 1 USDC debt. You can think of it as being separated into two claims, one that matures into the principal and another that represents the yield.
That sounds unnecessarily complicated until you look at what it lets the protocol do.
The borrower can create FTs against collateral, sell the interest component for liquidity, and lock in the borrowing economics at the start. The lender gets exposure to the fixed return through the corresponding token structure.
Its basically the same financial idea as separating the principal of a bond from its interest cashflows, except the pieces are tokens that can move around on-chain.
And thats the part I find interesting. TermMax isnt just putting a fixed rate on top of a normal DeFi loan. Its actually turning the different economic claims inside the loan into tradeable objects.
The question I keep coming back to is whether splitting one debt obligation into separate tokens creates genuinely better markets, or just more complexity that users eventually have to understand. @TermMax
$BTW $ACE $EDEN
#TermMax