#termmax @TermMax $TUT
Something bothered me while looking at TermMax:
If the rate is fixed, why should my order size matter?
I kept thinking about that until I went back to the AMM mechanics.
And then it became obvious.
Fixed-rate does not mean infinite liquidity at one rate.
TermMax uses a custom AMM with a pricing curve. When I trade through that liquidity, my order moves along the curve. The larger the order relative to available depth, the more slippage can matter.
So the number I see first is not the whole story.
Two users entering the same market can theoretically face very different execution quality simply because one is taking a much larger piece of the available liquidity.
That gave me a different way to look at TermMax markets.
Instead of asking only:
“What's the APR?”
I would rather ask:
“How much size can I actually execute near that APR?”
Because 6% on a screen with shallow usable liquidity may be less attractive to me than 6.3% where I can actually deploy the amount I want without pushing far down the curve.
This also explains why I think liquidity quality matters so much for TermMax.
Fixed maturity already splits capital across different markets and dates. Add different collateral pairs and different order sizes, and headline liquidity alone doesn't tell me much about execution.
The interesting metric isn't just the rate.
It's the rate at my size.
That is probably what I would check first before putting a serious position through a TermMax market.
$VVV
$EDEN
Something bothered me while looking at TermMax:
If the rate is fixed, why should my order size matter?
I kept thinking about that until I went back to the AMM mechanics.
And then it became obvious.
Fixed-rate does not mean infinite liquidity at one rate.
TermMax uses a custom AMM with a pricing curve. When I trade through that liquidity, my order moves along the curve. The larger the order relative to available depth, the more slippage can matter.
So the number I see first is not the whole story.
Two users entering the same market can theoretically face very different execution quality simply because one is taking a much larger piece of the available liquidity.
That gave me a different way to look at TermMax markets.
Instead of asking only:
“What's the APR?”
I would rather ask:
“How much size can I actually execute near that APR?”
Because 6% on a screen with shallow usable liquidity may be less attractive to me than 6.3% where I can actually deploy the amount I want without pushing far down the curve.
This also explains why I think liquidity quality matters so much for TermMax.
Fixed maturity already splits capital across different markets and dates. Add different collateral pairs and different order sizes, and headline liquidity alone doesn't tell me much about execution.
The interesting metric isn't just the rate.
It's the rate at my size.
That is probably what I would check first before putting a serious position through a TermMax market.
$VVV
$EDEN