I kept comparing TermMax's liquidation mechanics to Aave's, and something wouldn't sit right. Aave liquidates continuously random, probabilistic. TermMax concentrates them all at maturity. I used to think that was cleaner.
Surface read: borrow fixed-rate, fixed-term, post collateral, get liquidated at maturity if underwater. Mechanical.
But here's what it actually is: you're not distributing liquidation risk across time. You're batching it. All positions underwater at the same maturity window clear simultaneously. The protocol bought rate certainty by concentrating pressure into a known point.
What people miss: what happens when 40% of collateral matures in the same window? Who liquidates then? How much slippage hits when 50+ positions unwind at once? Fixed rates solved. Liquidation cascade risk didn't.
Think bond redemptions. Corporate bonds mature on schedule. That's when spreads widen, when markets get messiest. TermMax converted random liquidations into scheduled ones. Not risk elimination. Just a maturity calendar to manage.
I want to like it. But the trade-off is real: rate predictability costs you batched liquidation pressure. That's not bad. Just not invisible.
Watching to see how the protocol handles its first major maturity cluster under stress. That's when we know if batched liquidations are a feature or friction.
@TermMax #TermMax #termMAX
Surface read: borrow fixed-rate, fixed-term, post collateral, get liquidated at maturity if underwater. Mechanical.
But here's what it actually is: you're not distributing liquidation risk across time. You're batching it. All positions underwater at the same maturity window clear simultaneously. The protocol bought rate certainty by concentrating pressure into a known point.
What people miss: what happens when 40% of collateral matures in the same window? Who liquidates then? How much slippage hits when 50+ positions unwind at once? Fixed rates solved. Liquidation cascade risk didn't.
Think bond redemptions. Corporate bonds mature on schedule. That's when spreads widen, when markets get messiest. TermMax converted random liquidations into scheduled ones. Not risk elimination. Just a maturity calendar to manage.
I want to like it. But the trade-off is real: rate predictability costs you batched liquidation pressure. That's not bad. Just not invisible.
Watching to see how the protocol handles its first major maturity cluster under stress. That's when we know if batched liquidations are a feature or friction.
@TermMax #TermMax #termMAX