Terminology

Definitions and terminology relating to Term Auctions.

Tender

The Oxford Learner's dictionary defines the noun tender as: a formal offer to supply goods or do work at a stated price. In the context of business and finance, tenders typically refer to sealed or private offers submitted in response to a request. This is in contrast to open or publicly submitted offers common in public auctions. In Term Auctions, users are asked to submit tenders to borrow or lend, specifying the amount they are looking to borrow and lend as well as the rate at which they are willing to do so. A tender to borrow is a "bid" and a tender to lend is an "offer". Validly submitted tenders while the auction is open for tenders are sent to the Protocol for the determination of the clearing rate once the auction closes.

Bid

A bid is a tender to borrow a specified amount of purchase tokens at a specified pricing rate or repo rate. Bidding requires that the borrower lock the collateral tokens they intend to use to back their loan at the time a bid is submitted to ensure that the auction clears if the borrower is assigned in the auction. The amount required to be locked is equal to the amount they are looking to borrow multiplied by the initial margin ratio. All bids are sealed until the time an auction is closed for further submissions. Any bid higher than or equal to the clearing rate is eligible for assignment.

Offer

An offer is a tender to lend a specified amount of purchase tokens at a specified pricing rate or repo rate. Submitting an offer requires that the borrower lock the purchase tokens they are offering to lend at the time an offer is submitted to ensure that the auction clears if the lender is assigned in the auction. All offers are sealed until the time an auction is closed for further submissions. Any offer lower than or equal to the clearing rate is eligible for assignment.

Clearing Rate

The clearing rate is chosen by the Protocol and is set at the rate where supply meets demand. Any borrowers who bid higher than the clearing rate and any lenders who asked less than the clearing rate are eligible to be assigned in the auctions. All others are said to be "left on the table."

Announcement Date

The announcement date is the date on which the date of an upcoming auction is set and the terms of the underlying Term Repo are determined.

Auction Date

The auction date is the date on which an auction closes, a clearing rate is determined, and successful bids and offers are assigned.

Auction Time

The auction time is the time on the auction date at which no further tenders will be accepted and the clearing process begins.

Auction Window

The auction window is the period of time during which participants are allowed to submit tenders for consideration in an auction. The auction window typically begins 12 to 24 hours prior to the auction time where an auction closes to further submissions and the clearing process begins.

Assignment

Assignment is the action of processing successful bids and offers after a clearing price has been determined by the Protocol. Lenders who are assigned in the auction will receive ERC-20 tokens that will be redeemable 1:1 for the repurchase price on the repurchase date (maturity date). Borrowers who are assigned in the auction will receive purchase tokens in an amount equal to the amount they successfully bid for. Their collateral will remain locked in the Protocol, subject to liquidations and timely repayment.

Reveal Period

The reveal period begins shortly after the auction closes at the auction time. During this period, all validly submitted tenders will be revealed on-chain to determine the clearing rate and to process assignments.