I got backstabbed in a floating lending pool before. Back then I deposited some USDC to earn steady returns—until the market turned. Borrowing interest jumped from 4% straight to nearly 9%. I didn’t actually lose the principal, but the anxiety of not knowing how much interest you’ll earn every day was unbearable.
So when I broke down @TermMax , I focused on just one thing: whether it can lock the interest rate completely, and what hidden cost players have to pay for it.
#TermMax Its most unique feature is that it splits the debt into three parts: FT, GT, and XT. FT is similar to a zero-coupon bond—redeemed in equal amounts at maturity. GT is the NFT position that records the collateral and the debt. XT is used to pair with FT to balance the value; at maturity it simply becomes zero. The borrower posts collateral to mint GT and FT, then sells FT at a discount to cash out. The lender buys FT, holds it until maturity, and redeems for the full amount to profit from the price spread. In other words, it turns fixed income into an asset you can place on-chain orders for at any time.
Next, take a look at its Range Order. This thing doesn’t match a fixed APR to fixed terms—instead it uses a pricing curve to define an interest-rate range. The further along the timeline it goes, the lower the rate it offers. It’s essentially hard-coding the mapping relationship between pool depth and interest into the code. Different terms lead to different prices, and it lays out a yield curve directly on-chain. $BTC
But there’s no free lunch. The cost of locking the interest rate is the loss of liquidity. If you need to exit mid-way, you can only sell FT on the secondary market, suffering double damage from both the number of days and the discount rate. Even more painful: the collateral you need to lock can be extremely volatile. By maturity, what you receive might not be stablecoins, but a pile of downscaled collateral. Physical settlement can prevent a sell-off stampede, but this hot potato still ends up in the lender’s hands in the end. $ETH
I’m personally pretty cautious when analyzing trades. I prioritize pools where the collateral is hard currency and the liquidation threshold is set relatively wide. If a product’s yield is unbelievably high, don’t assume you’re getting a bargain—most likely it’s filled with risk premium.
Finally, one question for everyone: if the assets you get at the end of the loan are a bunch of deeply plummeted altcoins, have you planned your stop-loss strategy in advance? #termmax
So when I broke down @TermMax , I focused on just one thing: whether it can lock the interest rate completely, and what hidden cost players have to pay for it.
#TermMax Its most unique feature is that it splits the debt into three parts: FT, GT, and XT. FT is similar to a zero-coupon bond—redeemed in equal amounts at maturity. GT is the NFT position that records the collateral and the debt. XT is used to pair with FT to balance the value; at maturity it simply becomes zero. The borrower posts collateral to mint GT and FT, then sells FT at a discount to cash out. The lender buys FT, holds it until maturity, and redeems for the full amount to profit from the price spread. In other words, it turns fixed income into an asset you can place on-chain orders for at any time.
Next, take a look at its Range Order. This thing doesn’t match a fixed APR to fixed terms—instead it uses a pricing curve to define an interest-rate range. The further along the timeline it goes, the lower the rate it offers. It’s essentially hard-coding the mapping relationship between pool depth and interest into the code. Different terms lead to different prices, and it lays out a yield curve directly on-chain. $BTC
But there’s no free lunch. The cost of locking the interest rate is the loss of liquidity. If you need to exit mid-way, you can only sell FT on the secondary market, suffering double damage from both the number of days and the discount rate. Even more painful: the collateral you need to lock can be extremely volatile. By maturity, what you receive might not be stablecoins, but a pile of downscaled collateral. Physical settlement can prevent a sell-off stampede, but this hot potato still ends up in the lender’s hands in the end. $ETH
I’m personally pretty cautious when analyzing trades. I prioritize pools where the collateral is hard currency and the liquidation threshold is set relatively wide. If a product’s yield is unbelievably high, don’t assume you’re getting a bargain—most likely it’s filled with risk premium.
Finally, one question for everyone: if the assets you get at the end of the loan are a bunch of deeply plummeted altcoins, have you planned your stop-loss strategy in advance? #termmax