TermMax introduces three specialized tokens

Fixed-Rate Token (FT)

Type Fungible Token (ERC-20)

Function Acts as a zero-coupon bond, representing a commitment to repay 1 debt token "1 USDC" at maturity.

Dynamics: FTs are sold at a discount before maturity (20% discount), allowing lenders to earn a fixed return by redeeming them at full face value upon maturity.

X Token (XT)

Type: Fungible Token

Function: Complements FTs to ensure the value parity of 1 debt token.

Dynamics: At any moment, 1 FT + 1 XT = 1 debt token. Upon reaching maturity, FTs can be redeemed for debt tokens, rendering XT worthless (value drops to zero).

Gearing Token (GT)

Type: Non-Fungible Token (ERC-721)

Function: Represents an individual loan position, tracking both the collateral locked and the debt issued.

Dynamics: Each GT records the amount of collateral and the corresponding number of FTs minted, up to the market’s maximum loan-to-value (MLTV) ratio.

Borrowing Process

Locking Collateral and Minting GT + FT:

Borrower Action: The borrower locks a specified amount of collateral (e.g., ETH) into a GT.

Token Minting: For each debt token worth of USDC the borrower wishes to take, TermMax mints 1 FT. The total number of FTs minted is capped by the Maximum Loan-to-Value (MLTV) defined in the market (MLTV of 0.8 allows 1 ETH at $1,000 to back up to 800 USDC as debt).

Selling FTs for Immediate Liquidity:

Borrower Action: After minting, the borrower sells FTs on the open market at a discount (e.g., 20% discount, selling each FT for $0.80).

Result: Borrowers receive immediate liquidity (e.g., 800 FTs × $0.80 = $640) while committing to repay the full debt (800 USDC) at maturity.

Lending Process

Purchasing FTs:

Lender Action: Lenders buy FTs at a discounted rate ( $0.80 per FT).

Yield Mechanism: At maturity, each FT can be redeemed for 1 debt token (e.g., 1 USDC), providing lenders with a fixed return (25% gain from $0.80 to $1.00).

Redemption at Maturity:

Lender Action: Upon reaching the maturity date.
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