I spent the approx whole day reading through how @TermMax structures “fixed rate” lending instead of just trusting the label & the mechanism is more interesting than I expected.
They don’t lock a rate by placing one fixed number inside a contract.
Instead, the debt is split into two tradable parts:
FT: the claim to receive the full debt token at maturity
XT: the interest component, representing the yield
The key mechanic is simple: 1 FT + 1 XT = 1 debt token.
What clicked for me is this: when a lender buys an FT below its maturity value, that discount becomes the yield. For example, paying $0.95 today for an FT redeemable for $1 at maturity implies a fixed return over that period.
So the “fixed rate” isn’t dependent on a rate feed or a parameter that can change later. It is embedded in the price at which the FT is acquired.
It feels a lot like a zero-coupon bond structur but rebuilt as liquid onchain components rather than one static IOU.
That’s a much clearer design than simply calling something “fixed yield.”
Do you prefer fixed-rate DeFi products because of clearer outcomes, or variable yield because of flexibility?
#termmax @TermMax
They don’t lock a rate by placing one fixed number inside a contract.
Instead, the debt is split into two tradable parts:
FT: the claim to receive the full debt token at maturity
XT: the interest component, representing the yield
The key mechanic is simple: 1 FT + 1 XT = 1 debt token.
What clicked for me is this: when a lender buys an FT below its maturity value, that discount becomes the yield. For example, paying $0.95 today for an FT redeemable for $1 at maturity implies a fixed return over that period.
So the “fixed rate” isn’t dependent on a rate feed or a parameter that can change later. It is embedded in the price at which the FT is acquired.
It feels a lot like a zero-coupon bond structur but rebuilt as liquid onchain components rather than one static IOU.
That’s a much clearer design than simply calling something “fixed yield.”
Do you prefer fixed-rate DeFi products because of clearer outcomes, or variable yield because of flexibility?
#termmax @TermMax