#termmax TermMax’s one-click leverage looks like it only has two variables: the leverage multiple and the fixed interest rate.
I recently ran the numbers and found that the portion that truly eats the returns isn’t in either of those two figures.
Behind one-click leverage, there’s actually a chain of actions: borrow stablecoins, swap them into collateral assets, and then deposit them back as collateral. The protocol bundles these steps into an atomic transaction, but the market frictions at each step are still there.
When you make the swap, there’s slippage.
The borrowed principal is only possible if someone is willing to lend at that interest rate.
When you eventually close the position, you have to swap the collateral asset back into stablecoins—then pay slippage again.
These three costs can be negligible for small positions, but they’re decisive for large ones.
A very common logic for things going wrong looks like this:
See that the underlying yield of PT is 10%, borrowing cost is 6%, net spread is 4%. Add 3x leverage, and the expected annualized return shoots into the teens.
Then, in reality, each time you enter and exit, you slip by 0.5% each way—totaling 1%. With 3x leverage, that 1% is amplified on your own capital to 3%.
That 4% spread is already whittled down significantly before the strategy even starts running.
If you also need to rebalance mid-way, make partial repayments, or change maturities, every adjustment forces you to pay these costs again.
This is also why I think V2 spreading limit orders out is more concrete than what they advertise as a “fixed interest rate.”
Limit orders let you avoid passively accepting the price the current pool offers. For large positions, you can split the order, fill it gradually, and set your own pricing.
The trade-off is waiting—and waiting has a cost. That’s why TermMax needs to keep unfilled capital earning the underlying yield during the waiting period. Otherwise, limit orders would be a burden for big capital.
A unified Dashboard is the same kind of issue. If you can’t see your total exposure across multiple chains and different terms, you can’t judge whether you should add another position.
So when I evaluate a leverage strategy now, I don’t look at the nominal spread—I focus on one number:$SPCXB
From opening to closing, how many times do I have to pay friction costs?
Paying three times versus paying ten times— even if the paper spread is identical—leads to very different real outcomes.
Fixed interest rates solve the “price of borrowing.”
They don’t solve the “price of entering and exiting.”
And the latter is often more expensive.$SNDKB
#TermMax @TermMax