#termmax @TermMax
I’ve been looking at TermMax less through the fixed-rate narrative and more through what its numbers are actually telling me.
One ratio kept standing out.
DefiLlama showed roughly $31.22M TVL while active loans were around $27.28M. That puts active positions at close to 87% of reported TVL.
My first reaction was simply: that’s high utilization.
But the more I looked at the design, the less comfortable I was making that comparison with a normal pooled lending market.
TermMax does not really have the same “deposit capital, leave it sitting in a pool, wait for demand” structure.
When a lender enters, the FT is created at a discount. It represents the fixed-term, zero-coupon side, while the borrower takes the corresponding GT position. The yield is not something that slowly builds up as a floating balance. It is largely reflected in the FT’s price from the beginning.
That changes what “idle liquidity” means here.
Capital is either being placed into a defined fixed-term structure, or it isn't really in that same earning state.
So the 87% figure is interesting, but I don't think it automatically proves better capital efficiency.
It could mean capital is being deployed tightly.
Or it could mean the market is still small enough that there simply isn't much excess liquidity sitting around to absorb demand shocks.
Those are very different things.
And maybe that’s the more useful question to ask when looking at TermMax:
Is high utilization evidence that the market is efficient, or evidence that its liquidity cushion is still relatively thin?
I’m not sure yet. But I think that’s more interesting than the TVL number by itself.
I’ve been looking at TermMax less through the fixed-rate narrative and more through what its numbers are actually telling me.
One ratio kept standing out.
DefiLlama showed roughly $31.22M TVL while active loans were around $27.28M. That puts active positions at close to 87% of reported TVL.
My first reaction was simply: that’s high utilization.
But the more I looked at the design, the less comfortable I was making that comparison with a normal pooled lending market.
TermMax does not really have the same “deposit capital, leave it sitting in a pool, wait for demand” structure.
When a lender enters, the FT is created at a discount. It represents the fixed-term, zero-coupon side, while the borrower takes the corresponding GT position. The yield is not something that slowly builds up as a floating balance. It is largely reflected in the FT’s price from the beginning.
That changes what “idle liquidity” means here.
Capital is either being placed into a defined fixed-term structure, or it isn't really in that same earning state.
So the 87% figure is interesting, but I don't think it automatically proves better capital efficiency.
It could mean capital is being deployed tightly.
Or it could mean the market is still small enough that there simply isn't much excess liquidity sitting around to absorb demand shocks.
Those are very different things.
And maybe that’s the more useful question to ask when looking at TermMax:
Is high utilization evidence that the market is efficient, or evidence that its liquidity cushion is still relatively thin?
I’m not sure yet. But I think that’s more interesting than the TVL number by itself.