“Fixed rate” sounds like the borrower has only one repayment route. TermMax documents two.
A borrower can repay the debt recorded in the Gearing Token with the debt token itself, or acquire the corresponding Fixed-Rate Tokens and return those FTs to settle the obligation.
That second route matters because FT has a market price before maturity.
Suppose a position owes 1,000 units at maturity. Paying 1,000 debt tokens is the direct route. If 1,000 matching FTs can be bought for 970 debt tokens, repaying with FT may reduce the gross settlement cost to 970 before fees and price impact.
This is not free money. The required FT liquidity may be thin, the quote may move with size, and the correct token and maturity must match the debt.
I see the fixed rate as a ceiling on the contractual debt cost, while the secondary FT market may create a cheaper exit route under favorable conditions.
Before repaying, I would quote both paths for the full size instead of automatically pressing the obvious button.
Sources checked: TermMax Docs — Borrower; Protocol FAQ.
@TermMax #TermMax
A borrower can repay the debt recorded in the Gearing Token with the debt token itself, or acquire the corresponding Fixed-Rate Tokens and return those FTs to settle the obligation.
That second route matters because FT has a market price before maturity.
Suppose a position owes 1,000 units at maturity. Paying 1,000 debt tokens is the direct route. If 1,000 matching FTs can be bought for 970 debt tokens, repaying with FT may reduce the gross settlement cost to 970 before fees and price impact.
This is not free money. The required FT liquidity may be thin, the quote may move with size, and the correct token and maturity must match the debt.
I see the fixed rate as a ceiling on the contractual debt cost, while the secondary FT market may create a cheaper exit route under favorable conditions.
Before repaying, I would quote both paths for the full size instead of automatically pressing the obvious button.
Sources checked: TermMax Docs — Borrower; Protocol FAQ.
@TermMax #TermMax