One detail I kept thinking about while studying @TermMax is its approach to liquidation when the market simply doesn’t provide enough liquidity.

Most lending systems assume the answer is straightforward sell the collateral and return cash to the lender.

But that assumption gets weaker during a sharp move, especially with less liquid assets.

TermMax has another route physical delivery. If liquidation doesn’t fully recover the position, the lender can receive the actual collateral instead of waiting for everything to be converted into cash.

I think the important part is the change in incentives.

A liquidator no longer has to be the only exit route for the lender. The collateral itself becomes the recovery asset.

That doesn’t eliminate risk. The lender now owns an asset that may still be volatile, difficult to sell, or expensive to exit. But it can avoid forcing an illiquid asset into the market at the worst possible moment.

This feels particularly relevant as DeFi moves toward RWAs and assets that don't trade with deep 24/7 liquidity.

The question I’m watching is simple.
Could physical delivery become a more practical liquidation model as collateral becomes less liquid?

#termmax #TermMax #Termmax
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