# Term Repo Tokens

A unique feature of Term Repo transactions is that lenders receive ERC-20 tokens known as Term Repo Tokens in an amount equal to the [repurchase price ](/protocol/term-repos/terminology.md#repurchase-price)due to them on the [repurchase date](/protocol/term-repos/terminology.md#repurchase-date). These repo tokens represent a claim against the Term Repo and are normalized to convert 1:1 with the underlying [purchase token](/protocol/term-repos/terminology.md#purchase-token) at maturity when burned. 

The amount of repo tokens received by each lender is a function of the [clearing rate](/protocol/term-auctions/terminology.md#clearing-rate) and amount of [purchase tokens](/protocol/term-repos/terminology.md#purchase-token) successfully tendered in auction. The exact formula can be found in the [Conventions](/protocol/term-repos/conventions.md) section.

While lenders are not allowed to redeem prior to the repurchase date, they are free to find willing buyers of their Term Repo Tokens if they find themselves in need of liquidity.

{% hint style="info" %}
To the extent there are insufficient purchase tokens to cover the aggregate [repurchase price ](/protocol/term-repos/terminology.md#repurchase-price)owed across all borrowers party to a Term Repo, the redemption rate of the Term Repo's corresponding Term Repo Tokens will be subject to a haircut applied equally across all lenders. 
{% endhint %}


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