Three months ago, I personally opened and ran a looped leveraged position on TermMax. At the time, the FT implied interest rate was clearly higher than the yield from stablecoin deposits. I pledged ETH into GT, borrowed USDC to buy FT, and then took the expected cash flows from FT to further lever the position. In the end, my total exposure was pushed to nearly 80k U, with the leverage at a bit over three times. Mathematically, it looked very clean: as long as the spread didn’t invert and the FT price didn’t swing dramatically, I’d be able to harvest the fairly certain carry spread after three months.
Reality was harsher than the formula. In July, ETH saw a period of intense volatility. Market sentiment drove the secondary-market price of FT down by nearly four percentage points. My collateral ratio was instantly pushed from a comfortable zone to the edge of liquidation. In the end, I didn’t choose to hold through it—I actively sold half of the FT to repay the debt early, converting what was supposed to be a “fixed yield” into real, tangible losses of a little over ten thousand.
When I look back, the most painful part isn’t the numbers—it’s the logical mistake itself. Fixed-rate instruments solve uncertainty in the interest-rate path, but they do nothing to hedge volatility in the collateral’s price. Yet I took a product that only concerns interest rates and exposed myself to both interest-rate and price variables at the same time, then used leverage to amplify both risks together. GT’s mechanism works fine; the problem was the position design—mistaking “locking in yield” for “locking in risk.”
I’ve written this trade at the very front of my notebook: a fixed-rate instrument locks in only the interest rate—not the risk. After the TGE, if TMX staking can provide real, sustainable returns, I might try again on a smaller scale, but I’ll cut the leverage cap to within 1.5x. @TermMax #termmax
Reality was harsher than the formula. In July, ETH saw a period of intense volatility. Market sentiment drove the secondary-market price of FT down by nearly four percentage points. My collateral ratio was instantly pushed from a comfortable zone to the edge of liquidation. In the end, I didn’t choose to hold through it—I actively sold half of the FT to repay the debt early, converting what was supposed to be a “fixed yield” into real, tangible losses of a little over ten thousand.
When I look back, the most painful part isn’t the numbers—it’s the logical mistake itself. Fixed-rate instruments solve uncertainty in the interest-rate path, but they do nothing to hedge volatility in the collateral’s price. Yet I took a product that only concerns interest rates and exposed myself to both interest-rate and price variables at the same time, then used leverage to amplify both risks together. GT’s mechanism works fine; the problem was the position design—mistaking “locking in yield” for “locking in risk.”
I’ve written this trade at the very front of my notebook: a fixed-rate instrument locks in only the interest rate—not the risk. After the TGE, if TMX staking can provide real, sustainable returns, I might try again on a smaller scale, but I’ll cut the leverage cap to within 1.5x. @TermMax #termmax