How does SOFR compare to Term SOFR in the world of digital currencies?

3 answers

• Dec 17, 2021 · 3 years ago
  SOFR and Term SOFR are both interest rates used in the digital currency market, but they have some key differences. SOFR is an overnight rate that reflects the cost of borrowing cash overnight collateralized by Treasury securities. On the other hand, Term SOFR is a forward-looking rate that is based on SOFR but incorporates market expectations of future interest rates. This means that Term SOFR provides a longer-term view of borrowing costs compared to SOFR. In the world of digital currencies, these rates can impact lending and borrowing activities, as well as the overall cost of capital for market participants.
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• Dec 17, 2021 · 3 years ago
  When it comes to digital currencies, SOFR and Term SOFR play important roles in determining borrowing costs and interest rates. SOFR is widely used as a benchmark rate for overnight lending, while Term SOFR provides a forward-looking perspective on borrowing costs. The key difference between the two is the time horizon they represent. SOFR reflects short-term borrowing costs, while Term SOFR incorporates market expectations for future interest rates, providing a longer-term view. Both rates are important for market participants to consider when making lending and borrowing decisions in the digital currency space.
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• Dec 17, 2021 · 3 years ago
  In the world of digital currencies, the comparison between SOFR and Term SOFR is crucial. SOFR is an overnight rate that represents the cost of borrowing cash overnight collateralized by Treasury securities. On the other hand, Term SOFR is a forward-looking rate that incorporates market expectations of future interest rates. This means that Term SOFR provides a longer-term perspective on borrowing costs compared to SOFR. The choice between the two rates depends on the specific needs and preferences of market participants. Some may prefer the short-term view provided by SOFR, while others may opt for the forward-looking nature of Term SOFR. Ultimately, both rates serve important functions in the digital currency market and can impact lending and borrowing activities.
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