I’ve been thinking about how much of a lending protocol’s risk really comes down to a few numbers.
With @TermMax , MLTV and LLTV are the first things I’d look at.
MLTV sets how much you can borrow initially, while LLTV is where liquidation can actually begin. That gap matters because it gives a position some room before things become critical.
But risk doesn’t stop at LTV.
TermMax also uses fixed terms, partial liquidations, a 10% liquidation penalty, vault capacity limits, market whitelists, curators, and timelocks.
What I find more interesting is the physical delivery fallback. If a position can’t be fully liquidated, lenders may receive a pro-rata share of the collateral itself. That reduces the chance of simply ending with nothing, but it also means lenders can inherit an asset they may not actually want to hold.
So there’s a clear trade-off.
More aggressive parameters can improve capital efficiency, but they also leave less room for bad debt. More conservative settings protect lenders better, but can reduce utilization and growth.
That balance is probably where the real risk management happens.
I’m still curious how these parameters evolve as @TermMax markets mature.
DYOR. Not financial advice.#termmax @TermMax
With @TermMax , MLTV and LLTV are the first things I’d look at.
MLTV sets how much you can borrow initially, while LLTV is where liquidation can actually begin. That gap matters because it gives a position some room before things become critical.
But risk doesn’t stop at LTV.
TermMax also uses fixed terms, partial liquidations, a 10% liquidation penalty, vault capacity limits, market whitelists, curators, and timelocks.
What I find more interesting is the physical delivery fallback. If a position can’t be fully liquidated, lenders may receive a pro-rata share of the collateral itself. That reduces the chance of simply ending with nothing, but it also means lenders can inherit an asset they may not actually want to hold.
So there’s a clear trade-off.
More aggressive parameters can improve capital efficiency, but they also leave less room for bad debt. More conservative settings protect lenders better, but can reduce utilization and growth.
That balance is probably where the real risk management happens.
I’m still curious how these parameters evolve as @TermMax markets mature.
DYOR. Not financial advice.#termmax @TermMax