DeFi has a rather interesting point: the more flexible the interest rates are, the harder it can sometimes be to plan your capital.
If you borrow today at a certain rate, a few days later when the market shifts, your cost of capital may also change. For strategies with clearly defined time horizons, this kind of volatility isn’t always pleasant.
That’s why I’ve been paying attention to how <c-1/> @TermMax constructs fixed-rate and fixed-term lending.
Instead of looking only at a single pool where the interest rate changes continuously, TermMax designs markets with specific maturities. Lenders can access Fixed-Rate Tokens (FT), while the FT + XT mechanism is used to represent debt due by the maturity date.
What I find especially noteworthy is that interest rates are transformed into something that can be traded and priced across different terms.
Put simply: DeFi is no longer just a story of “what is the current interest rate?”, and it can start raising the question “how long do I want to lock in my cost or yield?”.
This is an approach worth keeping an eye on as fixed-income becomes an increasingly important piece of DeFi.
#termmax $BTC $ETH
If you borrow today at a certain rate, a few days later when the market shifts, your cost of capital may also change. For strategies with clearly defined time horizons, this kind of volatility isn’t always pleasant.
That’s why I’ve been paying attention to how <c-1/> @TermMax constructs fixed-rate and fixed-term lending.
Instead of looking only at a single pool where the interest rate changes continuously, TermMax designs markets with specific maturities. Lenders can access Fixed-Rate Tokens (FT), while the FT + XT mechanism is used to represent debt due by the maturity date.
What I find especially noteworthy is that interest rates are transformed into something that can be traded and priced across different terms.
Put simply: DeFi is no longer just a story of “what is the current interest rate?”, and it can start raising the question “how long do I want to lock in my cost or yield?”.
This is an approach worth keeping an eye on as fixed-income becomes an increasingly important piece of DeFi.
#termmax $BTC $ETH