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Term Auctions are sealed-bid, single-shot, double-auctions, also known as "call-markets" where bids and offers are batched by an auctioneer for matching and execution at pre-specified times.
Term Auctions are sealed-bid, second-price, single-shot, single-price double-auctions, or "call-markets," where lenders submit offers to lend purchase tokens, and borrowers submit bids to borrow purchase tokens. The Protocol then determines some interest rate that clears the market (the clearing rate): lenders willing to lend below the clearing rate make a loan and borrowers willing to pay at or above the clearing rate receive a loan, in each case at the clearing rate. By batching many orders together at periodic intervals, double auctions increase liquidity and decrease transaction costs.
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.