I was reading through TermMax's docs trying to figure out what "Fixed-Rate Token" actually meant, and I assumed the rate itself must be locked by the protocol, set once a market opens. That assumption didn't survive the first page on tokenization.
The docs describe FT as a zero-coupon bond: it commits to pay out 1 debt token at maturity, but it trades at a discount before that date. So the "fixed" part isn't a locked-in number, it's the destination, one full debt token, guaranteed at maturity. What a lender actually earns depends on the discount they buy in at, which is set by whichever range order they end up filling. That's when it clicked. What surprised me was the parity condition running underneath it: 1 FT plus 1 XT equals 1 debt token, holding at any moment, not just at settlement. XT isn't a side asset sitting off to the side, it's the other half of the same equation, and it becomes worthless the instant FT can be redeemed at maturity. The trade-off is that pricing shifts as time-to-maturity shrinks, so the effective rate changes with every trade instead of staying static. That seems intentional, letting the market discover the rate rather than having the protocol dictate it upfront.
I'm curious how closely that discount actually tracks time remaining once markets get thinner near maturity. #termmax @TermMax
The docs describe FT as a zero-coupon bond: it commits to pay out 1 debt token at maturity, but it trades at a discount before that date. So the "fixed" part isn't a locked-in number, it's the destination, one full debt token, guaranteed at maturity. What a lender actually earns depends on the discount they buy in at, which is set by whichever range order they end up filling. That's when it clicked. What surprised me was the parity condition running underneath it: 1 FT plus 1 XT equals 1 debt token, holding at any moment, not just at settlement. XT isn't a side asset sitting off to the side, it's the other half of the same equation, and it becomes worthless the instant FT can be redeemed at maturity. The trade-off is that pricing shifts as time-to-maturity shrinks, so the effective rate changes with every trade instead of staying static. That seems intentional, letting the market discover the rate rather than having the protocol dictate it upfront.
I'm curious how closely that discount actually tracks time remaining once markets get thinner near maturity. #termmax @TermMax