#termmax @TermMax
There is a subtle difference between “fixed rate” and “fixed return” that I think matters when discussing @TermMax
A lender can enter a fixed-rate market and have a defined maturity outcome.
But if the lender wants to exit before maturity, the market price of the FT becomes relevant.
So the original terms may remain fixed while the secondary-market value changes.
That distinction prevents a lot of confusion.
It also explains why liquidity matters so much.
If there is no meaningful market for the FT, the holder may have fewer practical exit options.
So I wouldn't evaluate a fixed-rate protocol only by looking at the advertised rate.
I'd want to understand:
maturity,
secondary liquidity,
pricing curves,
collateral quality,
and execution.
Those pieces together tell you much more about the actual financial instrument.
That is the part of @TermMax I find most interesting.
#TermMax
There is a subtle difference between “fixed rate” and “fixed return” that I think matters when discussing @TermMax
A lender can enter a fixed-rate market and have a defined maturity outcome.
But if the lender wants to exit before maturity, the market price of the FT becomes relevant.
So the original terms may remain fixed while the secondary-market value changes.
That distinction prevents a lot of confusion.
It also explains why liquidity matters so much.
If there is no meaningful market for the FT, the holder may have fewer practical exit options.
So I wouldn't evaluate a fixed-rate protocol only by looking at the advertised rate.
I'd want to understand:
maturity,
secondary liquidity,
pricing curves,
collateral quality,
and execution.
Those pieces together tell you much more about the actual financial instrument.
That is the part of @TermMax I find most interesting.
#TermMax