I assumed a TermMax loan had one boring ending: repay the debt token and get the collateral back. The protocol gives the borrower another route.
Suppose a GT records 1,000 USDC of debt.
Route A: repay 1,000 USDC directly.
Route B: acquire 1,000 matching Fixed-Rate Tokens and use those FTs to settle the debt. If FT trades at $0.96, the purchase costs $960 before fees, gas and slippage. At $0.99, it costs $990.
Why can that happen? FT trades before maturity. Its price responds to time remaining, prevailing rates and available liquidity. If the market moves in the borrowerโs favor, buying back the claim can cost less than repaying at face value.
That is not a guaranteed discount. A large FT order may move through the curve, and execution costs can erase a small saving.
My practical check would be simple: compare the total cost of acquiring enough FT with the direct debt-token repayment. The direct repayment amount gives the borrower a known contractual ceiling before execution costs, but it does not force the more expensive exit when the secondary market offers a cheaper one.
@TermMax #TermMax
Suppose a GT records 1,000 USDC of debt.
Route A: repay 1,000 USDC directly.
Route B: acquire 1,000 matching Fixed-Rate Tokens and use those FTs to settle the debt. If FT trades at $0.96, the purchase costs $960 before fees, gas and slippage. At $0.99, it costs $990.
Why can that happen? FT trades before maturity. Its price responds to time remaining, prevailing rates and available liquidity. If the market moves in the borrowerโs favor, buying back the claim can cost less than repaying at face value.
That is not a guaranteed discount. A large FT order may move through the curve, and execution costs can erase a small saving.
My practical check would be simple: compare the total cost of acquiring enough FT with the direct debt-token repayment. The direct repayment amount gives the borrower a known contractual ceiling before execution costs, but it does not force the more expensive exit when the secondary market offers a cheaper one.
@TermMax #TermMax