Lenders now have the chance to not only lend at a secure fixed-rate, but also earn extra rewards simply by participating in boosted ETH / apxETH ‘bomb pot’ auctions.
A total of 72 BTRFLY will be allocated across the first Term auction. The auction closes on Thursday Jul 18, 2024 at 1700 UTC.
Here’s how it works:
- Place offers to lend ETH in the wETH / apxETH auction You decide the minimum interest rate you're comfortable with.
- When the auction ends, our smart contracts automatically determine the optimal interest rate. If your offer to lend falls below this rate, congratulations! You'll secure this rate for the term of the loan.
- Following each auction, successful lenders will receive a portion of the bomb Term's auction incentive program based on their contribution.
Here is a simplified example below:
Scenario 1: No fill 🔴
You offer to lend at at 10% or higher
Clearing rate is 5%
→ Your submitted minimum rate is too high, no fill
Scenario 2: Fill 🟢
You offer to lend at 4% or higher
Clearing rate is 5%
→ Filled! You will lend at the 5% clearing rate, and receive your share of the bomb pot
How is my share of the bomb pot calculated?
Each successful lender in an auction will be awarded a share of the pot proportional to their contribution to total loans cleared in that auction.
Imagine there are three successful lenders in an auction with a $10,000 pot and $1mm total volume cleared:
$1mm Total Cleared
Alice: $400,000 / $1mm = 40%
Bob: $500,000 / $1mm = 50%
Chris: $100,000 / $1mm = 10%
They will each receive 40%, 50% and 10%, respectively:
Alice - ($400,000 / $1,000,000) * $10,000 Pot = $4,000 of the $10,000 pot
Bob - ($500,000 / $1,000,000) * $10,000 Pot = $5,000 of the $10,000 pot
Chris - ($100,000 / $1,000,000) * $10,000 Pot = $1,000 of the $10,000 pot
How do I calculate an implied APY?
In 2 easy steps: 1) calculate the unadjusted return, then 2) annualize it.
Using the example above, assuming a four week auction:
- Divide the bomb pot by the total volume cleared
- $10,000 pot / $1,000,000 total cleared —> 1% gross yield
- Multiply the gross yield by 13 (the number of 4 week periods in a year)
- 1% gross yield (over 4 weeks) * 13 = 13% annualized yield!
What implied APY should I expect?
The pot is fixed, but the lending volume over which it needs to be distributed varies.
pro rata reward = pot / total volume
Based on recent auctions over the past month this would imply APYs ranging from 4.2% to 16.7%+. No one will know, however, until the auction is closed and revealed similar in a way to bomb-pot poker.
Head to app.term.finance to browse the bomb pot auctions.
Important Legal Disclaimer
Your eligibility for and participation in the voluntary incentives program (the "Program") described above is subject to the term.finance Terms of Use and your compliance with the same. Terminal 0 Ltd. (the "Company") reserves the right, at its discretion, to: (a) disqualify participants from the Program for reasons including, but not limited to, failure to comply with the Terms of Use or abusive or fraudulent use of term.finance; and (b) modify the rules, incentives, and procedures of the Program, including substitution of incentives with those of equivalent value.
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