If the market continues to play mind games, it’ll only be a matter of time before we all look for loans to ensure that we can stay in these markets longer than countries like Germany can dump and outperform us all.

Speaking of loans, we’re revisiting Term Finance, and like before, we’re always happy to take a stroll into the world of on-chain lending to brief you on the recent developments with a focus on our favorite fixed-rate lending protocol, Term Finance.

Check Term out and get using the platform here. But if you’re new, Term Finance is a DeFi lending protocol that enables on-chain collateralized fixed-rate lending and borrowing through an auction process.

The interest rate on the loan is determined by the borrowers and lenders who participate in the auction.

We recommend reading our previous yappings on Term Finance to be well acquainted with the underpinnings of the above definition.

• Intro to Term Finance
• Term: fixed-rate loans versus variable-rate lending

In the most recent article, we evaluated how Term Finance fairs in varying market conditions vis-a-vis other variable-rate lending protocols and fixed-rate AMMs. We concluded that Term stands out even in risk management and liquidations.

In today’s article, we will examine some recent developments with the protocol and introduce Term points for those keen on its path to decentralization.

Protocol updates

The goal for Term Finance is to become the go-to place for fixed-rate loans, an alternative to or worthy competitor for variable-rate lending and borrowing.

To achieve this, the protocol ensures the right partnerships and collaborations and extends to multiple chains.

To this effect, since the release of our previous article, Term has joined the Circle Alliance Program, a global network for stablecoin innovation.

The Alliance Program will afford Term finance access to engage and network with members benefiting from joint marketing through the circle alliance directory and cross-membership partnership integrations.

However, another interesting update is introducing a point program to incentivize and reward genuine engagement and active participation within the Term ecosystem.

The program is designed for users to earn points by actively participating in the workings of the Term protocol (lending, borrowing, and auctions).

Term Points Program: The details

Term Finance will distribute points across five categories of user engagement: Auction, lending, invites, migration, and others.

Here’s how it all works:

For auctions, users will be rewarded with points when they participate in the auction process by submitting offers to lend.

These points will be proportional to the amount lent and the duration of the loan—the more you lend, the more points you can accrue.

Likewise, auction points can be earned through borrowing with emphasis on the amount borrowed and the length of the loan or duration of the loan term.

In order to allow users to earn more points or, should we say, maximize their auction points, Term has designed the points program for auction participation to benefit those who demonstrate genuine engagement with the protocol.

In this regard, auction points for both lenders and borrowers are adjusted according to the following:

• The length of participation
• Consistency in auction participation
• Diversity in participation i.e.,. lending or borrowing in different markets
• Actionable offers — prioritizing lending offers that fall within a competitive range
• Efficient allocation of liquidity— multipliers on offers with greater supply and demand imbalances

A second way users can earn points besides auction points is through “lending points” where Term Finance rewards any lenders on Term irrespective of the markets the loans were acquired: either primary or secondary markets.

Like the auction points, the lending points will be linearly weighted based on the amount lent and the duration of the loan.

Thirdly, users can earn points via invites to the protocol. This is a referral-based point distribution that’ll allow users to earn 10% of the points on auction, lending, or migration points from their referrals.  

Speaking of migration, this is another avenue for users to earn points. The migration points are for users with a wallet history showcasing activity on other major lending protocols.

Users who meet the requirement must participate in three separate auctions on Term to unlock migration points.

Lastly, there will be an opportunity to earn points through other interaction methods and community contributions. These points will be earned through the following:

• Ad-hoc games and competitions, in which users will be rewarded for participating in seasonal or surprise games designed for entertainment and engagement purposes.

• Ad-hoc campaigns include social media activities, promotional events, and collaborative projects within the community.

• Points can also be earned by contributing to the community through educational content, onboarding new users, and participating in discussions and development initiatives.

• Users can earn points by collecting badges, POAPs, and NFTs distributed to participate in community events or complete specific milestones.

What are these points geared towards? you might be tempted to ask, and rightly so.

Term points will eventually translate to rewards that are converted at the end of each reward cycle.

Users can accrue points across the many aforementioned activities, and there is no restriction whatsoever on the number of activities that a user can engage in.

However, the reward program is guided by several principles, such as that all points and rewards will be distributed fairly based on on-chain activities.

There will also be anti-Sybil mechanisms put in place to prevent gaming of the rewards system, as well as a favor for players who are loyal and consistent and for those who engage in a way that aligns with the long-term objectives of the protocol.

Term has also recently announced the raise of $5.5 million in a strategic round led by Electric Capital.

The first season of Term’s point program will end in Q4 with a 2x boost in points for the first 500 users. For good measure, we’re sticking our referral for those willing to jump on the wagon and ride the points.

Final thoughts

If you're particularly interested in the points program, it's important to note that Term's design simplifies participation.

Term is a fixed-rate lending protocol that allows participants to worry less about fluctuating interest rates. Rates are fixed, pool contagion risks are minimized since pools are separated by collateral and term, and liquidation risks are managed carefully.

Term only liquidates the minimum amount necessary to restore the borrower's position to the initial margin or a healthy status with a reasonable buffer.

All of these features and more—such as zero slippage, low fees, no spread, and capital efficiency—make Term Finance stand out. As of the last check, more than $100 million in loans had been cleared.

We have no doubt that Term Finance’s value proposition, combined with the points program to incentivize genuine participation, will attract and retain large-scale participants aligned with the protocol's long-term vision.