Blue Sheets (Simple-Earn)

The Blue Sheets Simple-Earn product makes fixed-rates accessible to those who don't have capacity to participate in Term auctions, offering on-demand, single-click access to fixed rates on-chain.

As a refresher, the Term Finance protocol enables the creation, servicing and monitoring of fixed-rate, fixed-term loans on-chain, backed by ERC-20 tokens (Term Repos). Lenders and borrowers are matched through weekly Term Auctions at a single interest rate, or clearing rate, and lenders who are successfully matched, receive ERC-20 receipt tokens (Term Repo Tokens). These Term Repo Tokens represent claims to repayment proceeds upon maturity of a loan -- similar to the "principal tokens" or "PT tokens" in various DeFi yield-stripping protocols. To protect lenders, Term Repo Loans and Term Repo Tokens are backed by collateral held in non-custodial contracts monitored by real-time price oracles, primarily Chainlink.

The Blue Sheets Simple-Earn product was created to make fixed-rate yields more accessible to the casual DeFi community who don't have time to monitor Term auctions, offering on-demand, single-click access to fixed rates on-chain.

Flow of the Blue Sheets (simple-earn) process

Process

The Blue Sheets simple-earn contract serves as a listing platform where holders of Term Repo Tokens—typically acquired through a Term Auction—can offer them for resale. A typical flow follows the two-step process outlined below:

1. Primary auction -> Blue Sheets

Participants who acquire Term Repo Tokens in the primary auction market transfer some or all of these tokens into the Blue Sheets simple-earn contract. The yield for these Term Repo Tokens is automatically set to match the clearing rate of the most recent auction, with a 0.25% annualized mark-up (Listing Rate). This mark-up incentivizes participants who acquired Term Repo Tokens in the primary auction market to make inventory available through the Blue Sheets simple-earn contract.

$$ListingRate(x) = AuctionRate(x)-0.25$$

1. Blue Sheets -> Blue Sheets earner

As a Blue Sheets earner, you can explore available Term Repo Tokens listed in the Blue Sheets simple-earn contract and acquire them at a fixed yield (Listing Rate). There is no slippage and no additional fees beyond standard gas costs. The amount available for acquisition, however, is capped to the amount listed within the Blue Sheets contract. When an earn transaction is initiated, the smart contract transfers the specified amount of Term Repo Tokens and deducts purchase tokens (such as USDC or wETH) in an amount equal to the price per Repo Token multiplied by the desired quantity. The acquisition price of Term Repo Tokens is calculated using the formula below:

$$Price(x,t) = \frac{1} {(1+ListingRate(x) * t/360)}$$

where

$$t = \text{Remaining time to maturity, in days}$$

This formula ensures that the price paid is always less than or equal to the amount redeemable upon maturity. The difference adjusted for the amount of time remaining until maturity is the "yield" earned by the user.

Use Case

The Blue Sheets Simple-Earn contract has no minimums and eliminates the complexities and time constraints of the primary market auction calendar and deadlines. Use the Blue Sheets Simple-Earn contract to build a portfolio or bond ladder that suits your needs, on your own timeline, with precise control and guaranteed fills up to the lending capacity.

Users who earn through the Blue sheets simple-earn contract are in fact acquiring Term Repo Tokens. Term Repo Tokens are not automatically redeemed upon maturity. To redeem, simply navigate to the Portfolio page on the main app to view, manage and redeem outstanding Term Repo Tokens.

All Risk Disclosures for the Term Finance Protocol remain applicable.