Someone Has to Take the Other Side
In the past, I often thought that @TermMax #TermMax a fixed rate was mostly good news for the borrower certainty, a number you can plan around. What I skipped over is the obvious question: who's willing to give it to them?
A fixed rate is a promise in two directions. The borrower locks their cost, but the lender locks their return and gives up the upside if floating rates climb later. That's not a small thing to ask. Most people supplying liquidity in DeFi like staying liquid and variable, riding the rate wherever it goes. To pull them into a fixed commitment, you usually have to pay a premium. Set it too high and borrowers walk. Too low and no lender shows up. The market just sits there, thin on one side.
This is the quiet problem under every fixed-rate protocol, TermMax included: designing a clean fixed-rate instrument isn't enough. You have to make being the fixed-rate lender genuinely worth it.
Who makes it work? Players who want predictable income treasuries, funds matching liabilities, anyone tired of variable swings. It works if both sides find a price they can live with. It fails if only borrowers show up.
$HEMI $BTW
In the past, I often thought that @TermMax #TermMax a fixed rate was mostly good news for the borrower certainty, a number you can plan around. What I skipped over is the obvious question: who's willing to give it to them?
A fixed rate is a promise in two directions. The borrower locks their cost, but the lender locks their return and gives up the upside if floating rates climb later. That's not a small thing to ask. Most people supplying liquidity in DeFi like staying liquid and variable, riding the rate wherever it goes. To pull them into a fixed commitment, you usually have to pay a premium. Set it too high and borrowers walk. Too low and no lender shows up. The market just sits there, thin on one side.
This is the quiet problem under every fixed-rate protocol, TermMax included: designing a clean fixed-rate instrument isn't enough. You have to make being the fixed-rate lender genuinely worth it.
Who makes it work? Players who want predictable income treasuries, funds matching liabilities, anyone tired of variable swings. It works if both sides find a price they can live with. It fails if only borrowers show up.
$HEMI $BTW