Last night, a friend in the group dropped a screenshot and asked, “On TermMax, which maturity has the highest annualized yield? Give me a direction.” I replied, “You’re asking the wrong question.” He sent a questioning face. I was going to type an explanation, but then I just put my phone down—this is something worth talking through properly.
In standard borrowing and lending agreements, the interest rate generally follows the utilization rate of the funds. One number rules them all: today it’s smart, tomorrow it’s low. But TermMax slices the demand for loans by maturity—splitting it into different time buckets. For the same underlying asset, the rates across different tenors can differ a lot. When short-term liquidity is tight, near-term rates spike high; when the market expects easing in the future, far-term quotes flatten out. In a way, it’s a maturity curve of an entire chain—like a row of thermometers, each one representing the market’s collective judgment of the price of funds at that point in time.
But most people just stare at “the highest annualized yield,” and I’ve stepped into that trap before. Annualized yield is time-adjusted—close to maturity, even a tiny price difference can balloon into a scary number. For example, for a 3-day FT, a discount of 0.14% can calculate to over 17% annualized. It sounds tempting, but your absolute profit is still only that small amount. Also, short-term pools are shallow. A trade that’s even moderately large can smash the implied interest rate out of shape; a “pretty” quote doesn’t mean you can actually execute at that price. I once charged into a short-term market—on the page, the annualized yield showed 30%+. After I entered, I found the depth wasn’t enough. Slippage wiped out most of my profit, and after all the fuss, I ended up making almost nothing.
There’s another easy-to-overlook point: liquidity gets fragmented. The same asset may simultaneously exist across five or six different maturities. Liquidity gets spread thin across each pool. It may look like the total TVL is big, but the depth in any single market is actually quite pathetic. The quote you see might just be a surface price built by stacking up only a few tens of thousands.
I’ve learned my lesson. I glance at the annualized number and move on. What I really care about is the absolute return, slippage, and how many days the money is tied up. Now I’ll make a simple table: calculate FT prices for different maturities, my buy-in cost, and the actual settlement amount at maturity—so I’m not being led around by annualized yield.
More importantly, I focus on four indicators: the real executed volume for each maturity, order book depth on the buy/sell side, how the rate changes after large trades, and whether liquidity suddenly dries up before maturity. Those are the ones that feel like a barometer—telling you whether a storm is coming.
When you choose a maturity, which metric do you look at first?
#TermMax @TermMax
In standard borrowing and lending agreements, the interest rate generally follows the utilization rate of the funds. One number rules them all: today it’s smart, tomorrow it’s low. But TermMax slices the demand for loans by maturity—splitting it into different time buckets. For the same underlying asset, the rates across different tenors can differ a lot. When short-term liquidity is tight, near-term rates spike high; when the market expects easing in the future, far-term quotes flatten out. In a way, it’s a maturity curve of an entire chain—like a row of thermometers, each one representing the market’s collective judgment of the price of funds at that point in time.
But most people just stare at “the highest annualized yield,” and I’ve stepped into that trap before. Annualized yield is time-adjusted—close to maturity, even a tiny price difference can balloon into a scary number. For example, for a 3-day FT, a discount of 0.14% can calculate to over 17% annualized. It sounds tempting, but your absolute profit is still only that small amount. Also, short-term pools are shallow. A trade that’s even moderately large can smash the implied interest rate out of shape; a “pretty” quote doesn’t mean you can actually execute at that price. I once charged into a short-term market—on the page, the annualized yield showed 30%+. After I entered, I found the depth wasn’t enough. Slippage wiped out most of my profit, and after all the fuss, I ended up making almost nothing.
There’s another easy-to-overlook point: liquidity gets fragmented. The same asset may simultaneously exist across five or six different maturities. Liquidity gets spread thin across each pool. It may look like the total TVL is big, but the depth in any single market is actually quite pathetic. The quote you see might just be a surface price built by stacking up only a few tens of thousands.
I’ve learned my lesson. I glance at the annualized number and move on. What I really care about is the absolute return, slippage, and how many days the money is tied up. Now I’ll make a simple table: calculate FT prices for different maturities, my buy-in cost, and the actual settlement amount at maturity—so I’m not being led around by annualized yield.
More importantly, I focus on four indicators: the real executed volume for each maturity, order book depth on the buy/sell side, how the rate changes after large trades, and whether liquidity suddenly dries up before maturity. Those are the ones that feel like a barometer—telling you whether a storm is coming.
When you choose a maturity, which metric do you look at first?
#TermMax @TermMax