In today's evolving crypto finance landscape, TERM Finance is gradually gaining market attention as an innovative protocol focused on solving the "impossible triangle" problem of DeFi lending,In today's evolving crypto finance landscape, TERM Finance is gradually gaining market attention as an innovative protocol focused on solving the "impossible triangle" problem of DeFi lending,

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What Is TERM Finance? 5 Key Features Analysis on How TERM Solves DeFi Lending Dilemmas

Jul 16, 2025MEXC

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In today's evolving crypto finance landscape, TERM Finance is gradually gaining market attention as an innovative protocol focused on solving the "impossible triangle" problem of DeFi lending, offering users an unprecedented borrowing experience. Whether you're an experienced cryptocurrency investor or a newcomer, understanding TERM could open new opportunities to your portfolio.

1. What is TERM Finance?

TERM Finance is a non-custodial, scalable fixed-rate lending protocol designed to bring the most fundamental financial instrument from traditional finance—fixed-rate lending—to the cryptocurrency market. Unlike other DeFi lending platforms, TERM achieves direct matching between borrowers and lenders through an innovative on-chain double auction mechanism, ensuring both parties trade at fixed rates for fixed terms without sacrificing transparency, efficiency, or security.

TERM Finance refers to the entire protocol and platform, while the TERM token is the platform's native token, similar to the relationship between Ethereum and ETH. As the core of the ecosystem, the TERM token grants holders various rights and functions.

2. Three Major DeFi Lending Dilemmas TERM Finance Aims to Solve

TERM Finance focuses on solving three core problems in the crypto lending market:

1）Lack of transparency in centralized finance (CeFi): Traditional centralized lending platforms (such as Celsius, BlockFi) lack sufficient transparency, with user assets completely controlled by centralized companies. The FTX collapse has proven the enormous risks in this model.

2）Insufficient scalability of DeFi fixed-rate platforms: Existing DeFi fixed-rate solutions are inefficient when handling large transactions, with highly volatile interest rate fluctuations and poor capital efficiency, making it difficult to attract sufficient liquidity.

3）Lack of stability in DeFi floating-rate platforms: Mainstream DeFi lending platforms (such as Aave, Compound) adopt floating rate models, where rates can surge from 5% to 20%, lacking predictability and making long-term financial planning challenging for users.

3. Five Core Features of TERM Finance

1) Innovative Double Auction Mechanism

Sealed bidding: All bids are hidden from the public through hash algorithms until market clearing.
Single price: All participants trade at the same clearing price.
Second-price mechanism: Reduces participants' incentives to submit non-true valuations.
Proportional allocation: Prioritizes the lowest-cost suppliers and the most willing borrowers.

2) Non-Custodial Fixed-Term Lending

Fixed-term, fixed-rate lending model.
Non-recallable: Neither party can terminate the contract early during the loan period.
Collateral-backed: All loans are backed by liquid digital assets.
Non-custodial architecture: Collateral locked in smart contracts, verifiable in real-time.

3) Efficient Capital Utilization

Funds are locked only during auction periods, and unsuccessful bids are immediately returned.
Single market clearing rate avoids supply-demand rate gaps.
No need for large idle funds to achieve scale.

4) Transparent Liquidation Mechanism

Clear maintenance margin rate requirements.
Smart contracts limit the amount of debt liquidators can cover.
Transparent and predictable liquidation process.

5) Enhanced Security Design

User screening mechanism ensures platform safety and compliance.
Independent Term Repo Locker design isolates collateral for different maturities and assets.
Reduces users' exposure to cybersecurity risks.

4. Main Functions of TERM Token

As the platform's native token, TERM has multiple practical functions:

1）Governance Participation: Holders can vote on important platform proposals, influencing the protocol's future development.

2）Staking Rewards: Staking TERM can earn additional rewards and more voting rights.

3）Transaction Fee Discounts: Holders enjoy discounts on platform service fees.

4）Priority Auction Participation: Holders of a specific quantity can gain special auction privileges.

5）Liquidity Provider Incentives: Incentivizes liquidity providers in the ecosystem.

6）Protocol Revenue Sharing: Through governance decisions, portions of protocol revenue may be allocated to token holders.

5. Future Development Potential of TERM Finance

From multiple dimensions, TERM Finance shows broad development prospects:

1）Product Diversification: Expected to expand its product offerings, launching more fixed-rate financial products with varying term options.

2）Asset Support Expansion: As the protocol matures, it may support more types of collateral, including tokenized real-world assets (RWA).

3）Institutional Cooperation: Its traditional finance-like characteristics have the potential to attract institutional investors, promoting integration between crypto and traditional finance.

6. How to Purchase TERM Tokens on MEXC

As a leading global cryptocurrency exchange, MEXC provides trading services for TERM tokens. Simple steps to purchase TERM:

1）Register a MEXC account: Visit the MEXC official website to complete registration and KYC verification.

2）Deposit funds: Deposit USDT or other mainstream cryptocurrencies to your MEXC account.

3）Find TERM trading pair: Search for "TERM" in the trading area, select the TERM/USDT trading pair.

4）Place a buy order: Choose market order or limit order, confirm quantity and amount before submitting the order.

5）Secure storage: After completing the transaction, you can store TERM in your MEXC account or transfer it to a personal wallet.

Disclaimer: This material does not provide advice on investment, tax, legal, financial, accounting, consulting, or any other related services, nor is it a recommendation to buy, sell, or hold any assets. MEXC Learn only provides information for reference and does not constitute any investment advice. Please ensure you fully understand the risks involved and invest cautiously. All investment behaviors by users are unrelated to this site.