#termmax TermMax’s fixed rate—the key isn’t the annualized return, but who will end up at zero
Revisit the fixed-rate design of @TermMax . What’s most worth pondering isn’t the yield, but how it splits the pricing of a single debt position. The loan is divided into FT and XT: FT corresponds to the maturity principal value. Lenders purchase it at a discounted price, then redeem it for 1 debt token at maturity—the difference is the fixed return. XT takes on the interest portion. With this setup, principal and interest each have their own price right from the opening of the position.
The collateral side is also packaged separately. The borrower’s position enters GT—an ERC-721—recording the collateral and the number of issued FTs. How many can be issued is constrained by the market MLTV. Repayment can be settled directly using debt tokens, or it can be done by buying back FTs from the market. If FTs are still trading at a discount, the latter method may be more cost-effective. But being tradable doesn’t mean you can exit smoothly at any time. When selling FTs early, both the price and liquidity depend on whether someone is willing to take the other side; if depth is insufficient, the discount cost still has to be borne by you.$NVDAB
What I truly remember about the structure of @TermMax is the moment of maturity: FT is redeemed at face value, while XT goes to zero. XT reaching zero isn’t an anomaly—it’s the result after the interest rights have run their course. Because it must go to zero, anyone who takes over in the middle must judge whether the remaining time and price make it worthwhile. In the past, when I looked at yield products, I would compute the annualized rate first. Now, I’ll first find which asset will lose value at maturity, and then confirm which side I’m standing on. #TermMax truly does this: it separates principal, interest, and maturity risk so the market can price each component separately.
Revisit the fixed-rate design of @TermMax . What’s most worth pondering isn’t the yield, but how it splits the pricing of a single debt position. The loan is divided into FT and XT: FT corresponds to the maturity principal value. Lenders purchase it at a discounted price, then redeem it for 1 debt token at maturity—the difference is the fixed return. XT takes on the interest portion. With this setup, principal and interest each have their own price right from the opening of the position.
The collateral side is also packaged separately. The borrower’s position enters GT—an ERC-721—recording the collateral and the number of issued FTs. How many can be issued is constrained by the market MLTV. Repayment can be settled directly using debt tokens, or it can be done by buying back FTs from the market. If FTs are still trading at a discount, the latter method may be more cost-effective. But being tradable doesn’t mean you can exit smoothly at any time. When selling FTs early, both the price and liquidity depend on whether someone is willing to take the other side; if depth is insufficient, the discount cost still has to be borne by you.$NVDAB
What I truly remember about the structure of @TermMax is the moment of maturity: FT is redeemed at face value, while XT goes to zero. XT reaching zero isn’t an anomaly—it’s the result after the interest rights have run their course. Because it must go to zero, anyone who takes over in the middle must judge whether the remaining time and price make it worthwhile. In the past, when I looked at yield products, I would compute the annualized rate first. Now, I’ll first find which asset will lose value at maturity, and then confirm which side I’m standing on. #TermMax truly does this: it separates principal, interest, and maturity risk so the market can price each component separately.