tToken (ERC20)

tToken

Term Structure Bond Token, or tToken, is an ERC20 token representing a fixed-income token for lenders. tTokens will be minted to the lenders after the auction match. The amount of the tTokens a lender receives is calculated with a simple interest rate. The tToken holders can redeem the underlying tokens with tTokens at a 1:1 ratio, i.e. 100 of tUSDC tokens will be able to redeem for 100 USDC on or after the maturity date.

The tToken will be minted from the zkTrue-up system. Like other ERC20 tokens, the tToken can be transferred on the Ethereum mainnet. Users can interact with other dApps (decentralized applications) with tToken after withdrawing these tokens to the mainnet.

The formula of the tToken pricing is shown below:

$$price\ \% = 100\ \% / (1+r*t/365)$$

r: annual interest rate

t: number of days to maturity

For example, if Bob lends 10,000 USDC to Alice for 6 months at 5%, Bob will receive 10,000 * (1 + 5% * 6 months / 12 months) = 10,250 tUSDC tokens. Therefore, the price of 1 tUSDC will be 10,000 / 10,250 * 100% ~= 0.975 * 100% = 97.5%. Bob will be able to redeem 10,250 USDC with this 10,250 tUSDC 6 months later. Before the maturity date, Bob can choose to sell or transfer part or all of his tUSDC, or he can use tUSDC as collateral to borrow USDC in Repo Markets.

Naming Rules

The naming rules of tToken are as follows

t{Lending Token}-{maturity date}

For example, tUSDC-20221231 represents a tToken where a token holder can use 1 tUSDC-20221231 to redeem 1 USDC after 00:00 UTC+0 on the maturity date 2022-12-31.

Trade tToken

Users can easily trade or transfer tTokens. It is simple and efficient to trade tTokens on the Term Structure Secondary Markets. Those who want to buy or sell tTokens will find liquidity and market information there. The minimum size for trading is smaller than that of Primary Markets.

The minimum trading amount in the Secondary Market is approximately USD100.

Collateralize tToken

In addition to selling the tTokens, the tToken holders can borrow the underlying tokens by collateralizing the tTokens in Repo Markets under the Term Structure protocol. This design can help tToken holders improve capital efficiency and provide a carry-trade strategy for long-term DeFi participants.

Repo Market will be developed in 2024 Q2 according to our roadmap.