I kept coming back to one detail in TermMax’s maturity flow because it complicates what “fixed-rate lending” promises.
My first read was straightforward: FT behaves like a zero-coupon claim. You buy it below face value, hold to maturity, and the maturity value gives you the fixed return.
Then I read the liquidation and physical-delivery rules.
A TermMax borrower’s debt sits against collateral inside a GT, and the position still has an LLTV. If LTV reaches that threshold, liquidation can happen before maturity. Fixed funding cost never meant frozen collateral risk.
What changed my read is what happens at the date itself.
TermMax says a borrower who misses repayment at fixed maturity is flagged for liquidation, with a two-hour window. If debt remains unpaid or only partially liquidated after that, physical delivery starts automatically. The redemption pool can then contain both underlying and collateral tokens, and FT holders redeem proportionally from it.
I was quietly collapsing two different things:
the return is fixed over the term;
the asset you ultimately receive is fixed.
They aren’t the same.
In TermMax’s normal repayment path, the zero-coupon model is clean: FT redeems into the debt asset. In the stressed path, the claim survives, but settlement can become a mixture of underlying and delivered collateral.
A TermMax lender can know the rate at entry while still asking how repayment arrives if maturity arrives badly.
In TermMax, maturity stops looking like a passive timestamp. Before it, collateral health and LLTV govern the loan. At it, repayment becomes due. After a missed payment, a liquidation window opens. After that, the redemption object can change.
The rate was fixed the whole time.
The settlement path wasn’t.
What I’m still thinking about is how lenders should price this when collateral is harder to liquidate. If physical delivery is the fallback when liquidity is weak, “fixed yield” may be easier to quote than the practical value of what arrives at the end.
@TermMax #TermMax $GPS $PORTAL
My first read was straightforward: FT behaves like a zero-coupon claim. You buy it below face value, hold to maturity, and the maturity value gives you the fixed return.
Then I read the liquidation and physical-delivery rules.
A TermMax borrower’s debt sits against collateral inside a GT, and the position still has an LLTV. If LTV reaches that threshold, liquidation can happen before maturity. Fixed funding cost never meant frozen collateral risk.
What changed my read is what happens at the date itself.
TermMax says a borrower who misses repayment at fixed maturity is flagged for liquidation, with a two-hour window. If debt remains unpaid or only partially liquidated after that, physical delivery starts automatically. The redemption pool can then contain both underlying and collateral tokens, and FT holders redeem proportionally from it.
I was quietly collapsing two different things:
the return is fixed over the term;
the asset you ultimately receive is fixed.
They aren’t the same.
In TermMax’s normal repayment path, the zero-coupon model is clean: FT redeems into the debt asset. In the stressed path, the claim survives, but settlement can become a mixture of underlying and delivered collateral.
A TermMax lender can know the rate at entry while still asking how repayment arrives if maturity arrives badly.
In TermMax, maturity stops looking like a passive timestamp. Before it, collateral health and LLTV govern the loan. At it, repayment becomes due. After a missed payment, a liquidation window opens. After that, the redemption object can change.
The rate was fixed the whole time.
The settlement path wasn’t.
What I’m still thinking about is how lenders should price this when collateral is harder to liquidate. If physical delivery is the fallback when liquidity is weak, “fixed yield” may be easier to quote than the practical value of what arrives at the end.
@TermMax #TermMax $GPS $PORTAL