Fixed Tokens & Fixed Debts

Fixed Tokens represent the claim to a unit of loan asset (e.g., 1 USDC) at maturity. On the other hand, Fixed Debts represent a unit of loan asset that is owed. Fixed Tokens and Fixed Debts are always minted in pairs at a 1:1 ratio. Therefore, the supply of Fixed Tokens and Fixed Debts in the protocol should always cancel out. This ensures that all Fixed Tokens are offset by an equivalent amount of Fixed Debts. When a user mints a set of Fixed Tokens and Fixed Debts, the overall effect on the value of the user's account is null, as they offset each other.

When a user borrows on Tenor, they mint an equivalent quantity of Fixed Tokens and Fixed Debts. The Fixed Tokens can be sent to the borrower's wallet or can be swapped for Loan Tokens against lenders. The Loan Tokens they receive in exchange for their Fixed Tokens enable them to redeem the loan assets.

When borrowers mint Fixed Tokens, the corresponding amount of Fixed Debts remain in the user's account and represent the amount of loan assets owed at maturity.

At Maturity

Fixed Tokens can be redeemed 1:1 for a unit of loan asset by lenders at maturity.

Borrowers on the other hand must deposit the amount of loan assets equivalent to their Fixed Debt balance. They can do this either by extending their loan to a longer dated maturity or by flash settling their account back to the underlying money market.

At maturity, Fixed Tokens immediately start accruing the underlying money market variable rate without any user action.