Term Finance

Term Finance is a fixed-rate lending protocol built on Ethereum. Its core business revolves around periodic auctions where borrowers and lenders submit sealed bids, and a clearing rate is determined to match them. Each auction creates a Term Repo, a fixed-term debt instrument, and lenders receive a Repo Token representing their claim on the repurchase price. The protocol also offers Meta Vaults, automated yield strategies built on Yearn V3, which allocate deposited assets across different Term Repos under DAO governance.

The main pain point Term Finance addresses is interest rate uncertainty in DeFi lending. Most lending platforms use variable rates, making borrowing costs unpredictable. Term Finance solves this by locking in a fixed rate for a specific period, providing certainty for both borrowers and lenders. Its competitive edge lies in the transparent auction mechanism, which discovers rates fairly, and the modular architecture separating the core protocol from the Meta Vault layer.

In the past six months, Term Finance suffered a significant governance attack. On August 23, 2026, an attacker acquired enough governance tokens for approximately $951 to gain control of four USDC strategy vaults and about 91% of the Ethereum Meta Vault. The attacker then submitted and approved proposals to transfer funds, stealing approximately 2,843 ETH and 1.68 million USDC, totaling around $8.5 million. Following the incident, Term Labs permanently closed all Meta Vaults and revoked DAO governance roles, blocking new deposits while keeping withdrawals open. The team has not yet confirmed the exact recovery amount or compensation plan, and the investigation is still ongoing.