#termmax @TermMax Spent late at night digging into how liquidations actually work on TermMax and noticing the rules are tighter than a typical open-ended pool.

A position becomes liquidatable when its loan-to-value hits or crosses the LLTV line. That can happen if the collateral price drops or the debt token rises. There is also a second trigger: if the borrower does not repay by the fixed maturity date, the loan opens for liquidation during a two-hour window.

When liquidation starts, the system does not always take everything at once. If the outstanding debt is above 10,000 dollars, a liquidator can only clear up to 50 percent of it in one go. That partial step is meant to reduce the hit on the borrower while still bringing the position back toward safer levels.

A 10 percent penalty is applied to the liquidated debt amount. Half of that goes to the liquidator as a reward, and the other half goes to the protocol reserve. If a position is fully cleared, any leftover collateral is returned to the borrower.

In some markets there is also a physical delivery path if the normal liquidation process does not fully resolve the debt.

Still chewing on whether the dual LTV buffer plus the partial-liquidation rule actually keeps most positions from reaching the edge, or whether the two-hour maturity window ends up doing more of the quiet work once real price swings arrive.

What matters most in liquidation design?