I spent an hour in TermMax's docs trying to answer one specific question: where does the quoted rate actually come from? Not the philosophy of it — the literal mechanical source of the number on screen.
The answer was simpler and stranger than expected. There's no utilization curve computing a rate from supply and demand. Curators and order makers configure range orders on a Uniswap V3-style curve, each one placing something close to a limit order for lending or borrowing at a maturity they choose. The rate is "fixed" because it's quoted, not calculated — and when several makers are actively quoting the same maturity, competition between them is what tightens the spread. That's a real edge over formula-driven markets when it holds.
What the landing page doesn't spell out is what happens when it doesn't hold. If only one or two makers are active on a given maturity, the curve is just whatever they set, with nothing forcing it toward a competitive price. And who's even eligible to place those orders isn't open — a Whitelist Manager contract governs which addresses can act as curator or order maker at all. Thin liquidity isn't an occasional glitch here. It's the default state for any maturity the whitelisted makers haven't shown up to compete on.
That risk doesn't sit with the protocol. It sits with whoever borrows or lends into a maturity where "fixed" means locked in, not competitively priced.
Do maker-quoted rates or formula-derived rates produce fairer costs in a thin market, and why?
#termmax @TermMax
The answer was simpler and stranger than expected. There's no utilization curve computing a rate from supply and demand. Curators and order makers configure range orders on a Uniswap V3-style curve, each one placing something close to a limit order for lending or borrowing at a maturity they choose. The rate is "fixed" because it's quoted, not calculated — and when several makers are actively quoting the same maturity, competition between them is what tightens the spread. That's a real edge over formula-driven markets when it holds.
What the landing page doesn't spell out is what happens when it doesn't hold. If only one or two makers are active on a given maturity, the curve is just whatever they set, with nothing forcing it toward a competitive price. And who's even eligible to place those orders isn't open — a Whitelist Manager contract governs which addresses can act as curator or order maker at all. Thin liquidity isn't an occasional glitch here. It's the default state for any maturity the whitelisted makers haven't shown up to compete on.
That risk doesn't sit with the protocol. It sits with whoever borrows or lends into a maturity where "fixed" means locked in, not competitively priced.
Do maker-quoted rates or formula-derived rates produce fairer costs in a thin market, and why?
#termmax @TermMax