> For the complete documentation index, see [llms.txt](https://docs.term.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.term.finance/protocol/term-auctions.md).

# Term Auctions

## Term Auctions

Term Auctions are sealed-bid, second-price, single-shot, single-price [double-auctions](https://en.wikipedia.org/wiki/Double_auction), or "call-markets," where lenders submit offers to lend [purchase tokens](/protocol/term-repos/terminology.md#purchase-token), and borrowers submit bids to borrow [purchase tokens](/protocol/term-repos/terminology.md#purchase-token). The Protocol then determines some interest rate that clears the market (the [clearing rate](/protocol/term-auctions/terminology.md#clearing-rate)): lenders willing to lend below the [clearing rate](/protocol/term-auctions/terminology.md#clearing-rate) make a loan and borrowers willing to pay at or above the [clearing rate](/protocol/term-auctions/terminology.md#clearing-rate) receive a loan, in each case at the [clearing rate](/protocol/term-auctions/terminology.md#clearing-rate). By batching many orders together at periodic intervals, double auctions increase liquidity and decrease transaction costs.

{% hint style="info" %}
Fills in auction are assigned with priority given to lenders most willing to pay (highest bid) and borrowers most willing to lend (lowest offer). A bid above the market clearing rate or an offer below the market clearing rate is not guaranteed to result in a fill. Fills will be assigned until the total market clearing volume is exhausted on either side of the market.
{% endhint %}


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